Question: Nodebt, Inc., has zero debt (wd = 0). It is considering restructuring to increase its percentage of debt to wd = 40%. Its beta is

Nodebt, Inc., has zero debt (wd = 0). It is considering restructuring to increase its percentage of debt to wd = 40%. Its beta is 0.8, the risk-free rate is 7%, the market risk premium is 8%, and if it restructures, the required return on its debt will be 11%. Nodebt's tax rate is 25%.

Using the Hamada equation, calculate Nodebt's required return on equity after the recapitalization.

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