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Macedonia Machinery, Inc. is a publicly traded company with a beta equal to 2.50. The market average rate of return is 10% while the risk-free
Macedonia Machinery, Inc. is a publicly traded company with a beta equal to 2.50. The market average rate of return is 10% while the risk-free rate is 4%. The firm currently has a total debt ratio of .50 and faces a tax rate of 40%. Use the Hamada Equation to estimate the company's cost of equity if the firm's managers decided to switched to a 100% equity capital structure. (Carry at least four decimal places in your calculations, but report your final answer rounded to two decimal places.)
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