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The required return on equity for an unlevered firm is 12%. The firm plans on changing its capital structure (recapitalization) to a debt-to-equity ratio of

The required return on equity for an unlevered firm is 12%. The firm plans on changing its capital structure (recapitalization) to a debt-to-equity ratio of 0.6. If the firm's current tax rate is 40% , what will be its new cost of equity after the recapitalization?

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