What would happen to the expected rate of return on equity, Financial Management

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What would happen to the expected rate of return on equity

A firm currently has a debt-equity ratio of 1/5. The debt, which is virtually riskless, pays an interest rate of 6.6%. The expected rate of return on the equity is 14%. What would happen to the expected rate of return on equity if the firm reduced its debt-equity ratio to 1/6? Assume the firm pays no taxes. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

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Financial Management: What would happen to the expected rate of return on equity

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Financial Management: What would happen to the expected rate of return on equity

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