Beckman engineering and associates (bea) is considering a change in its capital structure bea currently has $20 million in debt carrying a rate of 8%, and its stock price is $40 per share with 2 millions shares outstanding. bea is a zero growth firm and pays out all of its earnings as dividends. ebit is $14,933 millions, and bea faces a 40% debt, federal plus-rate-tax rate. the market risk premium is 4%, and the risk-free rate is 6%. bea is considering increasing its debt level to a capital structure with 40% 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 beta of 1.0.

a- what is bea's unlevered beta? use market value d/s when unlevering.
b- what are bea's new beta and cost of equity if it has 40% debt?
c- what are bea's wacc and total value of the firm with 40% debt? .
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The gilbert instrument corporation is considering replacing the wood steamer it currently uses to shape guitar sides. the steamer has 6 years of remaining life. if kept,the steamer will have depreciaiton expenses of $650 for five years and $325 for the sixthyear. its current book value is $3,575, and it can be sold on an internet auction site for$4,150 at this time. if the old steamer is not replaced, it can be sold for $800 at the endof its useful life. gilbert is considering purchasing the side steamer 3000, a higher-end steamer, whichcosts $12,000 and has an estimated useful life of 6 years with an estimated salvage value of$1,500. this steamer falls into the macrs 5-year class, so the applicable depreciationrates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. the new steamer is fasterand allows for an output expansion, so sales would rise by $2,000 per year; the newmachine's much greater efficiency would reduce operating expenses by $1,900 per year.to support the greater sales, the new machine would require that inventories increase by$2,900, but accounts payable would simultaneously increase by $700. gilbert's marginalfederal-plus-state tax rate is 40%, and its wacc is 15%.a. should it replace the old steamer? b. npv of replace = $2,083.51