Roxy Broadcasting, Incorporated is currently a low leveraged firm with a debt-to-equity ratio of 1/ 3. The

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Roxy Broadcasting, Incorporated is currently a low leveraged firm with a debt-to-equity ratio of 1/ 3. The company wants to increase its leverage to 3/1 for debt-to-equity. If the current return on assets is 14% and the cost of debt is 11%, what is the current and new cost of equity if Roxy operates in a world of no taxes?

Cost Of Debt
The cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as bonds and loans, among others. The cost of debt often refers to before-tax cost of debt, which is the company's cost of debt before taking...
Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...
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