Question
De Leon Imports is currently 100% equity financed, but would like to have a debt to equity ratio of 0.7. If their cost of equity
De Leon Imports is currently 100% equity financed, but would like to have a debt to equity ratio of 0.7. If their cost of equity is currently 19.7%, what will it be after the move? Their cost of debt is 5% and their tax rate is 28%.
Please give your answer in the form of a decimal, to the nearest 0.001. For example, if the cost of equity is 8.67%, your answer should be 0.087.
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Quantitative Analysis for Management
Authors: Barry Render, Ralph M. Stair, Michael E. Hanna, Trevor S. Ha
12th edition
133507335, 978-0133507331
