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Use the following information pertaining to Totem # 1 6 - # 2 0 . You are assessing the optimal capital structure for Totem Holdings,

Use the following information pertaining to Totem #16-#20.
You are assessing the optimal capital structure for Totem Holdings, a large publicly traded chemical company with 100 million shares trading at $30 per share and $1 billion in debt outstanding. The firm currently has a pre-tax cost of debt of 6% and you have correctly estimated the current cost of capital to be 9%. The firm is planning to borrow an additional $2 billion (which will push up the pre-tax cost of debt to 7%) and
use the proceeds to buy back $1 billion in stock and invest $1 billion in its existing business. For simplicity, assume that the debt beta remains to be zero. The firm's tax rate is 40%, the current riskfree rate is 5%, and the market risk premium is 4%.Current coat of equity is 10.8%(before capital raising)
1. Find the unlevered asset beta
2.Find the new levered equity beta after the transaction
3. Find the new cost of equity after the transaction
4 Find the new WACC after the transaction
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