Question: A firm that is financed completely with equity currently has a cost of capital equal to 15 percent. If Modigliani and Millers Proposition 1 holds

A firm that is financed completely with equity currently has a cost of capital equal to 15 percent. If Modigliani and Miller’s Proposition 1 holds and the firm’s management is thinking about changing its capital structure to 50 percent debt and 50 percent equity, then what will be the cost of equity after the change if the cost of debt is 10 percent?

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