What is the new return on equity

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Point 1: The common stock and debt of Northern Sludge are valued at $75 million and $25 million. Investors require a 16.1% return on the common stock and a/an 7.6% return on the debt.

Point 2: If Northern Sludge issues an additional $12 million of common stock and uses this money to retire debt, what happens to the expected return on the stock?

Question 1: What is the New return on equity % ?

Reference no: EM132485940

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