Morales publishings tax rate is 40 its beta is 110 and it


Question: Morales Publishing's tax rate is 40%, its beta is 1.10, and it uses no debt. However, the CFO is considering moving to a capital structure with 0.35 debt and 0.65 equity. If the risk-free rate is 5.0% and the market risk premium is 6.0%, by how much would the capital structure shift change the firm's cost of equity?

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Finance Basics: Morales publishings tax rate is 40 its beta is 110 and it
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