TND Ltd is an all-equity firm and its financial manager is planning to change its capital structure to maintain a debt-equity ratio of 0.24. The firm's unlevered beta is 0.77. The expected market rate of return is 12.24 percent and the risk-free rate of return is 3.89 percent. If the applicable tax rate for TND Ltd is 39 percent, calculate the new cost of equity for this firm.

Answer rating: 100% (QA)

The cost of equity for TND Ltd can be calculated using the Capital Asset Pricing Model CAPM Cost of ... View the full answer