Morales Publishing's tax rate is 30%, its beta is 1.20, and it uses no debt. However, the CFO is considering moving to a capital structure with 30% debt and 70% 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? 1.53% 1.70% 2.16% 2.05% 1.87%

Answer rating: 100% (QA)

Calculation of Cost of equity when the capital structure has only equity ie no debt As per the infor... View the full answer