Question: A firm has zero debt in its capital structure. Its overall cost of capital is 9%. The firm is considering a new capital structure with

A firm has zero debt in its capital structure. Its overall

A firm has zero debt in its capital structure. Its overall cost of capital is 9%. The firm is considering a new capital structure with 40% debt. The interest rate on the debt would be 4%. Assuming that the corporate tax rate is 34%, its cost of equity capital with the new capital structure would be

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