A firm has zero debt in its capital structure its overall


A firm has zero debt in its capital structure. Its overall cost of capital is 8% The firm is considering a new capital structure with 50% debt (D/E = 50%). The interest rate on the debt would be 5%. Assuming that the corporate tax rate is 40%, its cost of equity capital with the new capital structure would be?

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Financial Management: A firm has zero debt in its capital structure its overall
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