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A firm has zero debt in its capital structure. Its overall cost of capital is...

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Finance

A firm has zero debt in its capital structure. Its overall cost of capital is 10%. The firm is considering a new capital structure with 60% debt. The interest rate on the debt would be 8%. Assuming there are no taxes or other imperfections, its cost of equity capital with the new capital structure would be _____.

a.

9%

b.

13%

c.

10%

d.

14%

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