Question
A firm has a capital structure ratio of 60/40. The risk-free rate is 2%, the expected market return is 10%, and the tax rate is
A firm has a capital structure ratio of 60/40. The risk-free rate is 2%, the expected market return is 10%, and the tax rate is 24%. The current cost of equity is 11%. What is the estimated cost of equity if the firm changed its capital structure ratio to 40/60?
| 7.7% | ||
| 8.3% | ||
| 7.1% | ||
| 8.0% |
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Principles Of Banking
Authors: Allyn C Buzzel
11th Edition
089982689X, 9780899826899
