Question: Pedestal, Inc. currently has a capital structure with D/A = 0.41 and its current cost of debt is 8%. If Pedestal modifies its capital structure

Pedestal, Inc. currently has a capital structure with D/A = 0.41 and its current cost of debt is 8%. If Pedestal modifies its capital structure so that D/A changes to 0.37, its cost of debt will change to 6% and its new cost of equity will be 14%. What is Pedestal's current cost of equity? Assume perfect capital markets and, therefore, no taxes.

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