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 40%. It currently has a levered beta of 1.15. the risk free are is 3.5% and the risk premium on the market is 7%. U.s. Robotics Inc. is considering changing its capital structure to 60% debt and 40% equity. Increasing the firms level of debt will cause its before tax cost of debt to increase to 12%. 1.What is Robotics unlevered beta? 2. Relever U.S. Robotics Inc's beta using the firm's new capital structure. Use, Robotics levered beta under the new capital structure to solve for its cost of equity under the new capital structure?

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