26. Flying K Corporation currently has a capital structure consisting of 70% debt and 30% equity. It's beta is 1.9 and its cost of debt is 9%. That is too much debt for the CFO's taste and Flying K is considering significantly reducing the amount of debt by issuing equity and paying down the debt. Its target is 20% debt and 80% equity and if it does so, its cost of debt will decline to 5%. The risk free rate is 3% and the market risk premium is 6%. What will be its new required rate of return if it recapitalizes in this way? Use the APV model's levering and unlevering formulas, NOT Hamada. 10.9% b. 11.5% 12.0% d. 12.6% 13.3% a. c. e. 26. Flying K Corporation currently has a capital structure consisting of 70% debt and 30% equity. It's beta is 1.9 and its cost of debt is 9%. That is too much debt for the CFO's taste and Flying K is considering significantly reducing the amount of debt by issuing equity and paying down the debt. Its target is 20% debt and 80% equity and if it does so, its cost of debt will decline to 5%. The risk free rate is 3% and the market risk premium is 6%. What will be its new required rate of return if it recapitalizes in this way? Use the APV model's levering and unlevering formulas, NOT Hamada. 10.9% b. 11.5% 12.0% d. 12.6% 13.3% a. c. e