Capital structure does not affect the risk of the debt

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Reference no: EM131547083

The common stock and debt of Northern sludge are valued at 563 and $37 million respectively Investors currently require a return of 157% on the stock and 8.0% on the debt sludge issues an additional $16 million of common stock and uses this money to retire debt what happens to the expected return on the stock? Assume that the change in capital structure does not affect the risk of the debt and that there are no taxes (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places)

Reference no: EM131547083

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