Question
ABC Company has a cost of equity of 15%. EBIT is 100. They currently have no debt. Find the new cost of equity if they
ABC Company has a cost of equity of 15%. EBIT is 100. They currently have no debt. Find the new cost of equity if they changed to using a capital structure that used 50% debt and 50% equity. The interest rate on the debt is 5% and the tax rate is 40%.
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Investment Analysis and Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown, Sanford J. Leeds
11th Edition
1305262999, 1305262997, 035726164X, 978-1305262997
