3 . Dirty Don's Bicycle Shop is current financed with 100% equity . The firm currently has 100,100 shares of common stock outstanding , selling for $50 per share . The stock's current beta 5 0 . 70 , the expected market rate of return is 10% and the risk - free rate is 30 %. Don is considering a capital restructuring project , where the firm would be financed with 45 % debt and 55 % equity . How many bonds would Don have to sell at par value ? Ignoring taxes , what would be the new levered cost of equity ? ( 2 250 bonds ; 1 1 9 % )