Question: Solve the following problems. Encode your answers with no words, no spaces, no compass, decimal rounded off to 2 decimal places. Daichi Inc. is reassessing

Solve the following problems. Encode your answers with no words, no spaces, no compass, decimal rounded off to 2 decimal places.

Daichi Inc. is reassessing its debt position. Its current capital structure is composed of 80% debt and 20% common equity, its beta is 1.60, and its tax rate is 35%. However, the CFO believes the company has too much debt and is considering switching to a capital structure with 40% debt and 60% equity. The risk-free rate is 4.0 percent, with a 6.0 percent market risk premium. How much does a change in capital structure affect the firm's cost of equity?

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