Firm cost of equity be if the firm makes the switch

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Reference no: EM131595492

An all equity firm has a cost of capital of 16 percent. The firm is considering switching to a debt-equity ratio of .65 with a pretax cost of debt of 7.5 percent. What will the firm's cost of equity be if the firm makes the switch? Ignore taxes.

A.18.25%

B.21.53%

C.20.42%

D.19.88%

E.22.46%

Reference no: EM131595492

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