Cost of levered equity if things go as planned

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Reference no: EM131300059

Lightyear Toys, Inc. currently has no debt outstanding. Its current cost of equity is 9% and the current value of the company is $18,000,000. Roy is proposing to finance 1/3 of its assets with debt at a cost of 6% per annum. What will be Roy’s cost of levered equity if things go as planned? Ignore any tax effects.

Reference no: EM131300059

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