Question: Question 22 (4 points) A firm has zero debt in its capital structure. Its overall cost of capital is 8%. The firm is considering a

Question 22 (4 points)

A firm has zero debt in its capital structure. Its overall cost of capital is 8%. The firm is considering a new capital structure with 30% debt. The interest rate on the debt would be 5%. Assuming that the corporate tax rate is 35%, what would be the cost of equity capital with the new capital structure?

Question 22 options:

7.6%

8.2%

7.9%

9.2%

8.8%

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