Assume no taxes and bankruptcy costs.

Brentwood, Inc. has a WACC of $20\%.$ It can borrow at $4\%.$

Brentwood has a target capital structure of $80\%$ equity and $20\%$ debt. The cost of equity is

If the target capital structure changes to $40\%$ equity and $60\%$ debt, the cost of equity will be

$24$; higher

$24$; lower

$21$; higher

$23$; lower

$23$; higher

$21$; lower