Question 22 (4 points)

A firm has zero debt in its capital structure. Its overall cost of capital is 8%. The firm is considering a new capital structure with 30% debt. The interest rate on the debt would be 5%. Assuming that the corporate tax rate is 35%, what would be the cost of equity capital with the new capital structure?

Question 22 options:

	7.6%
	8.2%
	7.9%
	9.2%
	8.8%