The current capital structure of MS Inc. is given as follows:

Equity:10,000 shares trading at $90 per share,

Beta=1.25,

Market risk premium=8%,

Riskless rate=3%

Debt: 5,000 outstanding bonds quoted at $105, bond yield is 3%, no taxes and bankruptcy

The firm seeks to repurchase shares by issuing more debt (capital restructuring) and achieve an equity beta of 1.75.

1) What is the current WACC of MS Inc.? A. 8.34% B. 7.48% C. 9.32% D. 10.89% E. 11.75%

2) What is the unlevered beta of MS Inc? A. 0.38 B. 0.29 C. 0.55 D. 0.67 E. 0.79

3) What is the new D/E ratio and cost of equity, and the WACC after restructuring?