Hubbard industries is an all equity firm whose shares have


Hubbard Industries is an all equity firm whose shares have an expected return of 11.3%. Hubbard does a leveraged recapitalization, issuing debt and repurchasing stock, until its debt-equity ration is 0.71. Due to the increase risk, shareholders now expect a return of 18.1%. Assuming there are no taxes and Hubbard's debt is risk-free, what is the interest rate on the debt?

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Hubbard industries is an all equity firm whose shares have
Reference No:- TGS01419084

Expected delivery within 24 Hours