Please show work on how to calculate the answer. Question 5 0 / 5 pts...
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Accounting
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Question 5
0 / 5 pts
A firm is currently unlevered. Its equity Beta is 1.16. Assume the company will change its capital structure to a debt-equity ratio of 0.25 which it will maintain forever. The cost of debt will be 3%. The company's tax rate is 20%. The risk-free rate is 4%, and the expected market return is 11%. After the recap, the cost of equity (Re) will be _______%.
Margin of error for correct responses: +/- .03%
Rounding and Formatting instructions: Do not enter dollar signs, commas, or % signs in your response. Do not round any intermediate work, but round your *final* response to 2 decimal places (example: if your answer is 12.34567%, you should enter 12.35).
You Answered:
92.8
Correct Answer:
14.4
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