A firm currently has a debt-equity ratio of 1/2. The debt, which
is virtually riskless, pays...
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Finance
A firm currently has a debt-equity ratio of 1/2. The debt, whichis virtually riskless, pays an interest rate of 8.1%. The expectedrate of return on the equity is 12%. What would happen to theexpected rate of return on equity if the firm reduced itsdebt-equity ratio to 1/3? Assume the firm pays notaxes. (Do not round intermediate calculations.Enter your answer as a percent rounded to 2 decimalplaces.)
Expected rate of return onequity
%
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