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The management of Kinko's has had a target capital structure of 20/80 debt-to-equity (based on market values), but is contemplating moving toward a higher debt/equity
The management of Kinko's has had a target capital structure of 20/80 debt-to-equity (based on market values), but is contemplating moving toward a higher debt/equity ratio as the company financesits high rate of growth.
Under M&M theory with taxes, do the following rise, fall, or remain the same as Kinko's shifts to the higher debt ratio?
- WACC,
- Interest rate on debt,
- Cost of Equity,
- Debt/(Debt + Equity)
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