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SolBridge Inc. is all-equity-financed. The expected rate of return on the company's shares is 10%. Suppose the company issues debt, repurchases shares, and moves

SolBridge Inc. is all-equity-financed. The expected rate of return on the company's shares is 10%. Suppose the company issues debt, repurchases shares, and moves to a debt-to-equity ratio of 4 (D/E=4). What will be the company's weighted-average cost of capital at the new capital structure? The borrowing rate is 8% and the tax rate is 50%.

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