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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
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 4.2%. The firm currently has $6 in equity. if the firm goes ahead with the planned debt issuance, what do you expoct the firmis cost of equity to be? You can assume that the firm currenthly had a cost of capital of 10.5%, and a tax rate of 20%. The answer should be given in decimal form with three decimals (0.0. if the answer is 6.1% then write 0.061)
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