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17) An all equity firm has a cost of capital of 15 percent. The firm is considering switching to a debt-equity ratio of .65 with

17)

An all equity firm has a cost of capital of 15 percent. The firm is considering switching to a debt-equity ratio of .65 with a pretax cost of debt of 7.5 percent. What will the firm's cost of equity be if the firm makes the switch? Ignore taxes.

11.25%

12.21%

16.67%

19.88%

21.38%

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