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Question 25 10 points Save Answer Morales Publishing's tax rate is 20%, its beta is 1.10, and it uses no debt. However, the CFO is
Question 25 10 points Save Answer Morales Publishing's tax rate is 20%, its beta is 1.10, and it uses no debt. However, the CFO is considering moving to a capital structure with 30% debt and 70% equity. If the risk-free rate is 4.0% and the market risk premium is 6.0%, by how much would the capital structure shift change the firm's cost of equity? (Hint:Use Hamada Equation to calculate levered beta and make use of SML/CAPM equation) On 2.2696 Ob 1.87% OG 1.7096 Od 2.05% O: 1.53%
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