SBM has a capital structure consisting of 20% debt and 80% equity. The frim debt currently has an 8% yield to maturity. The risk-free rate (rRF) is 5%, and the market risk premium (rM rRF) is 6%. Using the CAPM, SBM estimates that its cost of equity is currently 12.5%. The company has a 40% tax rate.

What is SBM`s current WACC?

What is the current beta on SBM common stock?

What would SBM`s beta be if the company had no debt in its capital structure? ( That is, what is Bloom's, unlevered beta, bU ?)

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