Question: Need help with Finance Question, read it carefully and check your answer please. Thank you. Assume that Firm A is an all-equity firm with total

Need help with Finance Question, read it carefully and check your answer please. Thank you.

Need help with Finance Question, read it carefully and check your answer

Assume that Firm A is an all-equity firm with total assets of $5,000 and the following distribution of EBIT for the coming year: Now assume that the firm plans to issue $2,000 of debt, at an interest rate of 6.4 percent, and use the proceeds to repurchase equity (you may ignore potential impacts on price and assume that the firm will then have $3,000 of equity). Given this information, determine the standard deviation of the new ROE distribution. 3.774% 2.800% 3.098% 2.653% 3.487%

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