Beckman engineering and associates is considering a change

Beckguy Engineering and Associates (BEA) is considering a readjust in its funding framework. BEA presently has $20 million in debt moving a rate of 8%, and its stock price is $40 per share with 2 million shares impressive. BEA is a zero-growth firm and also pays out every one of its income as dividends. The firm?s EBIT is $14.933 million, and it deals with a 40% federal-plus-state taxes rate. The sector danger premium is 4%, and the risk-totally free price is 6%. BEA is considering enhancing its debt level to a funding structure through 40% debt, based on industry worths, and also repurchasing shares through the additional money that it borrows. BEA will have to retire the old debt in order to concern new debt, and the rate on the new debt will certainly be 9%. BEA has actually a beta of 1.0.,a. What is BEA?s unlevered beta? Use sector value D/S once unlevering.,b. What are BEA?s brand-new beta and expense of equity if it has actually 40% debt?,c. What are BEA?s WACC and total value of the firm via 40% debt?

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