Question 20 Firm DoobaScoob is financed 100% by common stock. The expected return on the common stock is 13%. Now assume that the doobaScoob issues debt and uses the proceeds to retire equity. Assume that the bonds are default free and require 6% return, and that there are no taxes. The new financing mix is 60% equity and 40% debt. What is the new expected rate of return on equity? 13% 13.6% 15.2% 17.7%