QUESTION 7 Assuming no market imperfections or taxes, a firm is currently all equity financed. The expected return on the equity is 10%. The firm plans to switch to being 25% debt financed by issuing debt and paying the proceeds in a dividend. Assuming the debt will have expected returns of 6%, what number below is the closest to the new expected return on equity? 0996 O 1096 O 1196 O 1296 O 1396