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Peach Ltd is an all-equity company with a beta of 1.1. The market return is 10% and the risk-free rate is 4%. Peach's management is
Peach Ltd is an all-equity company with a beta of 1.1. The market return is 10% and the risk-free rate is 4%. Peach's management is considering a change in capital structure that will result in a debt to equity ratio of 0.8. The cost of debt will be 5% and there are no taxes. What is Peach Ltd's cost of equity after the debt issue?
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Corporate Finance and Investment decisions and strategies
Authors: Richard Pike, Bill Neale, Philip Linsley
8th edition
1292064064, 978-1292064161, 1292064161, 978-1292064062
