A firm has a leverage beta of 1.6 and a D/E ratio of 1. the firm long term target -leverage is D/E target = 0.5. Assuming that: the corporate rate is 50% the expected market return is 9% and free risk rate is 6%, asses the cost of equity for the firm under the target financial structure (hint: remember unlevering and levering)

Answer rating: 100% (QA)

To assess the cost of equity for the firm under the target financial structure we need to perform th... View the full answer