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Archimedes Levers is financed by a mixture of debt and equity. You have the following information about its cost of capital: r E = ?

Archimedes Levers is financed by a mixture of debt and equity. You have the following information about its cost of capital:

rE = ? % rD = 12 % rA = ? %
betaE = 2.0 betaD = ? betaA = ?
rf = 10 % rm = 18 % D/V = 0.65

Suppose now that Archimedes repurchases debt and issues equity so that D/V = 0.45. The reduced borrowing causes rD to fall to 11%. Calculate the rE, rA, betaE, betaD, and betaA.

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