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Assuming that the debt financing costs do not change, what effect would a shift to a more highly leveraged capital structure consisting of 50% long-term

  • Assuming that the debt financing costs do not change, what effect would a shift to a more highly leveraged capital structure consisting of 50% long-term debt, 0% preferred stock, and 50% common stock have on the risk premium for Ecos common stock? What would be Ecos new cost of common equity? What would be Ecos new weighted average cost of capital? Which capital structurethe original one or this oneseems better? Why?

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