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9.12 A Fortune 100 firm is financed with $15 billion in debt and $5 billion in equity. If this firm holds its underlying structure constant,

9.12

A Fortune 100 firm is financed with $15 billion in debt and $5 billion in equity. If this firm holds its underlying structure constant, would you expect the cost of capital on its equity to be higher or lower if the firm restructured its funding by repurchasing shares financed with new debt?

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