Question
A company currently has no debt and its beta is 1.20. Its tax rate is 35%. The manager wants to change the capital structure. The
A company currently has no debt and its beta is 1.20. Its tax rate is 35%. The manager wants to change the capital structure. The expected debt is 40% and equity is 60%. If the market risk premium is 7.0%, and the risk-free rate is 6.0%, what is the change of the company's cost of equity?
| 3.451% |
| 3.640% |
| 3.892% |
| 3.910% |
| 3.968% |
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Analysis for Financial Management
Authors: Robert C. Higgins
12th edition
1259918963, 9781260140729 , 978-1259918964
