BBY (the company you analyzed in Question 10) is considering the following change: The firm will recapitalize
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Question:
BBY (the company you analyzed in Question 10) is considering the following change: The firm will recapitalize by lowering its current D/V ratio by 75% (i.e. New D/V = Old D/V * 0.25). Cost of Debt (RD) will either increase or decrease by 0.3%, i.e. New RD = Old RD +/- 0.3% (you have to figure out whether the recapitalization would lead to increase vs. decrease in RD).
What will be BBY Cost of Equity (RE) after recapitalization?
Related Book For
Accounting Information Systems
ISBN: 978-0133428537
13th edition
Authors: Marshall B. Romney, Paul J. Steinbart
Posted Date: