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Suppose that a firm firm currently has no debt but is planning on issuing $ 4 . 0 M in corporate bonds to finance a

Suppose that a firm firm currently has no debt but is planning on issuing $4.0M in corporate bonds to finance a major expansion. The expected cost of debt is 5.5%. The firm currently has $9 in equity. If the firm goes ahead with the planned debt issuance, what do you expect the firms cost of equity to be? You can assume that the firm currenthly has a cost of capital of 10.5%, and a tax rate of 20%

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