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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Most states have licensing registration requirements for child care centers and family daycare homes. these usually include minimum standard for operation. which of the following would you most likely find required in a statement of state licensing standards for child care centers?

Suppose that two firms produce differentiated products and compete in prices. as in class, the two firms are located at two ends of a line one mile apart. consumers are evenly distributed along the line. the firms have identical marginal cost, $60. firm b produces a product with value $110 to consumers.firm a (located at 0 on the unit line) produces a higher quality product with value $120 to consumers. the cost of travel are directly related to the distance a consumer travels to purchase a good. if a consumerhas to travel a mile to purchase a good, the incur a cost of $20. if they have to travel x fraction of a mile, they incur a cost of $20x. (a) write down the expressions for how much a consumer at location d would value the products sold by firms a and b, if they set prices p_{a} and p_{b} ? (b) based on your expressions in (a), how much will be demanded from each firm if prices p_{a} and p_{b} are set? (c) what are the nash equilibrium prices?

The stock of grommet corporation, a u.s. company, is publicly traded, with no single shareholder owning more than 5 percent of its outstanding stock. grommet owns 95 percent of the outstanding stock of staple inc., also a u.s. company. staple owns 100 percent of the outstanding stock of clip corporation, a canadian company. grommet and clip each own 50 percent of the outstanding stock of fastener inc., a u.s. company. grommet and staple each own 50 percent of the outstanding stock of binder corporation, a u.s. company. which of these corporations form an affiliated group eligible to file a consolidated tax return?