Optimal Capital Structure with Hamada Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currently has $20 million in debt carrying a rate of 6%, 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 $15 million, and it faces a 25% federal-plus-state tax rate. The market risk premium is 6%, and the risk-free rate is 5%. 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 11%. BEA has a beta of 1.1. a. What is BEA's unlevered beta? Use market value D/S (which is the same as wd/ws) when unlevering. Do not round intermediate calculations. Round your answer to two decimal places. b. What are BEA's new beta and cost of equity if it has 40% debt? Do not round intermediate calculations. Round your answers to two decimal places. Beta: Cost of equity: % c. What is BEA's WACC with 40% debt? Do not round intermediate calculations. Round your answer to two decimal places. % What is the total value of the firm with 40% debt? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1.234 million should be entered as 1.234, not 1,234,000. Round your answer to three decimal places. million Check My Work (5 remaining)

Metallica Bearings, Incorporated, is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $14 per share 10 years from today and will increase the dividend by 3.9 percent per year thereafter. If the required return on this stock is 11.5 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Current share price $ 166.17

he partnership of Winn, Xie, Yang, and Zed has the following balance sheet: Cash $ 35,000 Liabilities $ 47,000 Other assets 241,000 Winn, capital (50% of profits and losses) 65,000 Xie, capital (30%) 84,000 Yang, capital (10%) 45,000 35,000 Zed, capital (10%) Zed is personally insolvent, and one of his creditors is considering suing the partnership for the $4,000 that is currently owed. The creditor realizes that this litigation could result in partnership liquidation and does not wish to force such an extreme action unless Zed is reasonably sure of obtaining at least $4,000 from the liquidation. Determine the amount for which the partnership must sell the other assets to ensure that Zed receives $4,000 from the liquidation. Liquidation expenses are expected to be $20,000. (Do not round intermediate calculations.) Minimum Amount:

vonconstant Growth Stock valuation Reizenstein Technologies (RT) has just developed a solar panel capable of generating 200% more electricity than any solar panel currently on the market. As a result, RT is expected to experience a 20% annual growth rate for the next 5 years. By the end of 5 years, other firms will have developed comparable technology, and RT's growth rate will slow to 5% per year indefinitely. Stockholders require a return of 10% on RT's stock. The most recent annual dividend (D), which was paid yesterday, was $2.95 per share. a. Calculate RT's expected dividends for = 1, 2, 3, 4, and r = 5. Do not round intermediate calculations. Round your answers to the nearest cent. D₁ = $ D₂ = $ D₂ = $ D₁ = $ D₁ = $ b. Calculate the estimated intrinsic value of the stock today, widehat(P), Proceed by finding the present value of the dividends expected at 1,1 = 2,1 = 3,1 = 4, and 5 plus the present value of the stock price that should exist at = 5, widehat(P). The widehat(P) stock…