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Q No. 1 Lucky Cement is trying to establish its optimal capital structure. Its current capital structure consists of 20% debt and 80% equity: however,

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Q No. 1 Lucky Cement is trying to establish its optimal capital structure. Its current capital structure consists of 20% debt and 80% equity: however, the CEO believes that the firm should use more debt. The risk-free rate, RF, is 5% the market risk premium, RPM is 6%, and the firm's tax rate is 40%. Currently. Lucky Cement has beta of 15. What would be Lucky Cement's estimated cost of equity if it changed its capital structure to 40% debt and 60% equity? Should the company opt new capital structure? (decide based on the cost of equity computations)

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