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(b) The Nantiere Esi Corporation (NE) is a natural gas firm with a market debt-equity ratio of Suppose its current debt cost of capital is
(b) The Nantiere Esi Corporation (NE) is a natural gas firm with a market debt-equity ratio of Suppose its current debt cost of capital is 6%, and its equity cost of capital is 12%. Suppose also that if NE issues equity and uses the proceeds to repay its debt and reduce its debrequin ratio to 2, it will lower its debt cost of capital to 5.5%. With perfect capital markets, who effect will this transaction have on NE's equity cost of capital and WACC (Ignote tmes)
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