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A new firm in the industry has a beta of 1.25 and has its total assets composing of 70% equity. The risk free rate is

A new firm in the industry has a beta of 1.25 and has its total assets composing of 70% equity. The risk free rate is 3.8% and the expected excess return on the market is 15.6%. If this new firm decides to reduce its total weight in equity to 62.50% versus 70% what would its new cost of equity be?

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