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Company XYZ has a target capital structure of 30% equity and 70% debt. Its cost of equity is 10%, and cost of debt is 5%.

Company XYZ has a target capital structure of 30% equity and 70% debt. Its cost of equity is 10%, and cost of debt is 5%. What would happen to XYZs WACC if its capital structure were to shift to 40% equity and 60% debt?

wacc increases decreases or stays constant? and why

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