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Xavier cost of equity be after it secures debt financing

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Xavier, Inc. is an all-equity firm; its cost of equity is 13%. The firm is about to invest in a new manufacturing facility using debt such that it's debt ratio will rise to 25%. If Xavier's cost of debt is 7%, the risk-free rate is 4%, and if Xavier intends to maintain its debt ratio at 25%, what will Xavier's cost of equity be after it secures debt financing? (Where appropriate, assume a corporate tax rate of 21%).

Reference no: EM132509493

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