Multiple Choice
A firm has zero debt in its capital structure.Its overall cost of capital is 13%.The firm is considering a new capital structure with 55% debt.The interest rate on the debt would be 7%.Assuming there are no taxes or other imperfections,its cost of equity capital with the new capital structure would be:
A) 12.00%
B) 13.67%
C) 17.53%
D) 20.33%
E) None of the above.
Correct Answer:
Verified
Correct Answer:
Verified
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