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RECAPITALIZATION Currently, Forever Flowers Inc. has a capital structure consisting of 75% debt and 25% equity. Forever's financial staff is considering changing its capital structure

RECAPITALIZATION

Currently, Forever Flowers Inc. has a capital structure consisting of 75% debt and 25% equity. Forever's financial staff is considering changing its capital structure to 40% debt and 60% equity. If the company went ahead with this change, how would this impact the companys cost of capital? Would you recommend this change? Describe the impact of changing the capital structure.

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