ABC Inc. has a debt/equity ratio of 1.2. The firm has a cost of equity of 12%

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ABC Inc. has a debt/equity ratio of 1.2. The firm has a cost of equity of 12% and a cost of debt of 8%. What will be the cost of equity if the target debt/equity ratio increases to 2.0 and the cost of debt does not change? Ignore taxes

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Corporate Finance

ISBN: 9780077173630

3rd Edition

Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe

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Posted Date: Apr 22, 2024 12:10 AM

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ABC Inc. has a debt/equity ratio of 1.2. The firm has a cost of equity of 12%

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To calculate the change in the cost of equity with a change in the debtequity ratio we need to use t... View the full answer

Corporate Finance

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