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Your company currently has 60% equity and 40% debt capital structure. At the current state, it is estimated that your companys equity beta is 1.2
Your company currently has 60% equity and 40% debt capital structure. At the current state, it is estimated that your companys equity beta is 1.2 and debt beta is 0.8. a. If you would like to restructure your capital to 50% debt and 50% equity, what would be the equity beta of your firm? b. If the risk-free rate is 3% and the market return is 15%, what would be your equity cost of capital under the new capital structure?
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