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Current Wd 25% Tax rate 25% Structure Ws 75% Cost of Equity 14.4% Other Rf 5% Tax rate 25% Factors Market Risk Premium 9.8% As
| Current | Wd | 25% | Tax rate | 25% |
| Structure | Ws | 75% | ||
| Cost of Equity | 14.4% | |||
| Other | Rf | 5% | Tax rate | 25% |
| Factors | Market Risk Premium | 9.8% |
| As a CEO, you considering a change to your company's capital structure. The CFO believes the firm should increase the debt ratio (D/E) to 1.5. |
| What is the cost of equity of the target capital structure? |
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Accounting What the Numbers Mean
Authors: David Marshall, Wayne McManus, Daniel Viele
12th edition
978-1260565492
