Assuming there are no taxes and hubbards debt is risk-free


Hubbard industries is an all-equity firm whose shares have an expectd return of 10%. hubbard does a leveraged recapitalization, issuing debt and repurchasing stock, until its debt-equity ratio is .54. due to the increased risk, shareholders now expect a return of 15%. assuming there are no taxes and hubbards debt is risk-free, the interest rate on the debt is ________%.

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Risk Management: Assuming there are no taxes and hubbards debt is risk-free
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