Dhcom is considering borrowing funds at a cost of 6 and, Financial Management

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Dhcom is considering borrowing funds at a cost of 6 and

Suppose that DH.Com currently has no debt and has an equity cost of capital of 12%. DH.com is considering borrowing funds at a cost of 6% and using these funds to repurchase existing shares of stock. Assume perfect capital markets. If DH.com borrows until they achieved a debt -to-equity ratio of 50%, then DH.com's levered cost of equity would be closest to:

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Financial Management: Dhcom is considering borrowing funds at a cost of 6 and

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