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Question 3 XYZ Corp is currently has a debt-to-enterprise value ratio of 40%. Its current cost of equity is 15% and its current cost of

Question 3

XYZ Corp is currently has a debt-to-enterprise value ratio of 40%. Its current cost of equity is 15% and its current cost of debt is 5%. The firm wants to permanently change its financing policy to target a debt-to-enterprise value ratio of 14%. The cost of debt associated with this new financing policy will also be 5%. Assuming perfect markets, what will XYZ's cost of equity be after it implements this new financing policy? Express your answer in percent and round to two decimals (do not include the %-symbol in your answer).

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