31 Dye Industries currently uses no debt, but its new CFO...
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Dye Industries currently uses no debt, but its new CFO is considering changing the capital structure to 31.5% debt (wa) by issuing bonds and using the proceeds to repurchase and retire some common shares so the percentage of common equity in the capital structure We = 1 - wa declines. Given the data shown below, by how much would this recapitalization change the firm's cost of equity, i.e., what is r-ru? Do not round your intermediate calculations. Risk free rate, 6.00% Tax rate, 25% Market risk prem, RPM 3.50% Current wa 0% Current beta, bu 1.80 Target Wa 31.50% O 10.28 0 t PP. O 0720p O d. 2.17 PP 6.3.72 pp . D
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