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Wentworth Industries is 100 percent equity financed. Its current beta is 1.2 . The expected market rate of return is 17 percent and the risk-free
Wentworth Industries is 100 percent equity financed. Its current beta is 1.2 . The expected market rate of return is 17 percent and the risk-free rate is 9 percent. Round your answers to two decimal places. a. Calculate Wentworth's cost of equity. % b. If Wentworth changes its capital structure to 40 percent debt, it estimates that its beta will increase to 1.4. The after-tax cost of debt will be 5 percent. Should Wentworth make the capital structure change? Based on the weighted cost of capital of %, the capital structure changed. Wentworth Industries is 100 percent equity financed. Its current beta is 1.2 . The expected market rate of return is 17 percent and the risk-free rate is 9 percent. Round your answers to two decimal places. a. Calculate Wentworth's cost of equity. % b. If Wentworth changes its capital structure to 40 percent debt, it estimates that its beta will increase to 1.4. The after-tax cost of debt will be 5 percent. Should Wentworth make the capital structure change? Based on the weighted cost of capital of %, the capital structure changed
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