Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currently has $20 million in debe carrying a rate of 8%, and its stock price is $40 per share with 2 million shares outstanding. BEA is a zero growth firm and pays out all of its earnings as dividends. The firm's EBIT is $13.618 million, and it faces a 40% federal-plus- state tax rate. The market risk premium is 5%, and the risk-free rate is 5%. BEA is considering increasing its debt level to a capital structure with 30% debt, based on market values, and repurchasing shares with the extra money that it borrows. BEA will have to retire the old debt in order to issue new debt; and the rate on the new debt will be 9%. BEA has a betal of 1.2. a. What is BEA's unlevered beta? Use market value D/S (which is the same as wa/ws) when unlevering. Round your answer to two decimal places. ____
b. What are BEA's new beta and cost of equity if it has 30% debt? Do not round intermediate calculations. Round your answers to two decimal places. Beta ____ Cost of equity _____ %
c. What are BEA'S WACC and total value of the firm with 30% debt? Do not round intermediate calculations. Round your answer to two decimal places. What is the total value of the firm with 30% debt? Do not found intermediate calculations. Enter your answer in millions. For example, an answer of $1,2 mision should be entered os 1.2. not 1.200,000, Round your answer to three decimal places. $ ____ million.