BBY (the company you analyzed in Question 10) is considering the following change: The firm will recapitalize by lowering its current D/V ratio by 75% (i.e. New D/V = Old D/V * 0.25). Cost of Debt (R_D) will either increase or decrease by 0.3%, i.e. New R_D = Old R_D +/- 0.3% (you have to figure out whether the recapitalization would lead to increase vs. decrease in R_D). 

 

What will be BBY Cost of Equity (R_E) after recapitalization?

Answer rating: 100% (QA)

To determine the new cost of equity RE for BBY after recapitalization we need to calculate the weigh... View the full answer