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Somedebt, Inc., has a little debt (wd = 20%) with required return 8%. It is considering restructuring to increase its percentage of debt to wd
Somedebt, Inc., has a little debt (wd = 20%) with required return 8%. It is considering restructuring to increase its percentage of debt to wd = 50%. Its beta is 0.8, the risk-free rate is 6%, the market risk premium is 8%, and if it restructures, the required return on its debt will be 10%. Somedebt's tax rate is 25%. Using the Hamada equation, calculate Somedebt's required return on equity after the recapitalization? Do not round intermediate calculations. Round your answers to two decimal places.
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