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Dye Industries currently uses no debt, but its new CFO is considering changing the capital structure to 6 9 . 5 % debt ( wd
Dye Industries currently uses no debt, but its new CFO is considering changing the capital structure to debt wd by issuing bonds and using the proceeds to repurchase and retire some common shares so the percentage of common equity in the capital structure wc wd Given the data shown below, by how much would this recapitalization change the firm's cost of equity, ie what is rL rU Do not round your intermediate calculations.
Riskfree rate, rRF
Tax rate, T
Market risk prem, RPM
Current wd
Current beta, bU
Target wd
a
b
c
d
e
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