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Your capital structure consists of 30% debt and 70% equity and you believe that to use more debt. The risk-free rate is 5%; the market
Your capital structure consists of 30% debt and 70% equity and you believe that to use more debt. The risk-free rate is 5%; the market risk premium is 6%; and the tax is 40%. The cost of equity is 14%. What would be the estimated cost of equity if capital structure turns to 50% debt and 50% equity?
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