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  3. you are trying to evaluate farmingdale inc, a publ

You are trying to evaluate Farmingdale Inc, a publicly traded company, with a 20% debt...

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You are trying to evaluate Farmingdale Inc, a publicly traded company, with a 20% debt to capital ratio, a marginal tax rate of 40% and a beta (levered) of 1.15, which is considering a move to a 33.33% debt to capital ratio. What will the beta of the firm be after the move to 33.33% debt? O 1.15 @ 1.20 1.30 1.495 None of the above QUESTIONS In the cost of capital approach, you estimate the cost of equity and the cost of debt at each debt ratio and the resulting cost of capital. As you increase the debt ratio, which of the following is most likely to happen? O Cost of equity and cost of debt will both decrease Cost of equity and cost of debt will both increase O Cost of equity will go down but the cost of debt will go up Cost of equity will go up and the cost of debt will remain unchanged Cost of equity will go up but the cost of debt will go down

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