Robotics Inc. has a current capital structure of 30% debt and 70% equity. Its current before tax cost of debt is 10%, and its tax rate is 35%. It currently has a levered beta of 1.10. the risk free are is 2.5% and the risk premium on the market is 8%. U.s. Robotics Inc. is considering changing its capital structue to 60% debt and 40% equity. Inceasing the firms level of debt will cause its before tax cost of debt to increase to 12%.

1.What is Robotics unlevered beta?

2. Reiever U.S. Robotics beta using the firm's new captial structure.

3. Use Robotics levered beta under the new capital structure to solve for its cost of equity under the new capital struature.

4. What will the firms WACC be if it makes the changes in the capital structure?