Question: Question No: 07 This is a subjective question, hence you have to write your answer in the Text-Field given below. There is a debate in

Question No: 07 This is a subjective question, hence you have

Question No: 07 This is a subjective question, hence you have to write your answer in the Text-Field given below. There is a debate in XYZ Corporation regarding its capital structure. Being the full equity company, it does not have debt in its capital structure. XYZ Corporation's WACC (full equity case) is 12%; If the company needs to borrow, the cost of debt would be 7%. The firm's tax rate is 30%. The company CFO is wondering if the company opts for debt now and convert the capital structure into 25% debt and 75% equity, what will be its cost of equity? Calculate the new cost of equity value. (5M]

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