Question: You are analyzing a firm that is financed with 60 percent debt and 40 percent equity. The current cost of debt financing is 10 percent,

You are analyzing a firm that is financed with 60 percent debt and 40 percent equity. The current financing is 10 percent, but due to a recent downgrade by the rating agencies, the firm's is expected to increase to 12 percent immediately. How will this change the firm's weighted average if you ignore taxes?

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