Question: Firm ABC currently uses no debt. Given the data shown below, if the firm changes the capital structure to 75% of debt, the firm's new

Firm ABC currently uses no debt. Given the data shown below, if the firm changes the capital structure to 75% of debt, the firm's new cost of equity will be?

Risk-free rate: 3.00% Market return: 11.00%

Current beta:1.2 Tax rate: 40%

Current debt level: 0% Target debt level: 75%

		17.46%
		29.88%
		22.03%
		12.75%

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