Morales Publishing's tax rate is 30%, its beta is 1.20, and it uses no debt. However, the
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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%
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Financial management theory and practice
ISBN: 978-0324422696
12th Edition
Authors: Eugene F. Brigham and Michael C. Ehrhardt
Posted Date: