A company that is currently 1 0 0 % equity financed has a required return on its
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Question:
A company that is currently equity financed has a required return on its equity of
The company would like to get rid of some of the equity in its capital structure, and replace it
with debt, for tax purposes. In particular, the company wants to replace of its shares of
stock with debt ie convert to a debttovalue ratio If the firm pays interest at a rate of
what will be the required return on the firms equity after the firm changes its capital
structure?
A
B
C
D
E
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