Question: answer this correctly and i will leave a quick like One of your new employees notes that your debt has a lower cost of capital

answer this correctly and i will leave a quick like

One of your new employees notes that your debt has a lower cost of capital (6%) than your equity (14\%). So, he suggests that the firm swap its capital structure from 29% debt and 71% equity to 71% debt and 29% equity instead. He estimates that after the swap, your cost of equity would be 21%. a. What would be your new cost of debt? Make your calculations based on your firm's pre-tax WACC. b. Have you lowered your overall cost of capital

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