Vectren is an all equity firm. The firm has a cost of capital of 10.40 percent. Vectren is considering switching to a debt-equity ratio of
Vectren is an all equity firm. The firm has a cost of capital of 10.40 percent. Vectren is considering switching to a debt-equity ratio of .45 with a pretax cost of debt of 6.2 percent. What will the firm's cost of equity be if it makes the switch? Ignore taxes. 13.05% 12.65% 12.29% 11.96% 11.75%
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Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil, Sidney Davidson
7th Edition
0030259630, 978-0030259630
