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2. Benta Inc. currently has zero debt, zero growth. It is considering using some debt, moving to the new debt/assets ratio indicated below* New Debt/Assets
2. Benta Inc. currently has zero debt, zero growth. It is considering using some debt, moving to the new debt/assets ratio indicated below* New Debt/Assets New Equity/Assets Interest rate new = fa 55% 45% 7.0% Orig. cost of equity, 1. New cost of equity =. Tax rate 10.0% 11.0% 40% The money raised would be used to repurchase stock at the current price. It is estimated that the increase in risk resulting from the additional leverage would cause the required rate of return an equity to rise somewhat, as indicated above. If this plan were carried out, by how much would the WA CC change? a. 2.74% b. 3.01% 0.3.32% d. 3.65% e. None of the above
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