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Vafeas Inc.'s capital structure consists of 80% debt and 20% common equity, its beta is 1.60, and its tax rate is 35%. However, the CFO thinks the company has too much debt, and he is considering moving to a capital structure with 40% debt and 60% equity. The risk-free rate is 5.0% and the market risk premium is 6.0%. By how much would the capital structure shift change the firm's cost of equity?
Compliance
The act of adhering to established guidelines, standards, or laws.
Routine Request
A standardized or commonly made inquiry or appeal for information, services, or action in the course of regular operations or transactions.
Complex Requests
Inquiries or demands that involve multiple steps, conditions, or elements, often requiring careful consideration and planning to execute.
Inconvenience
The state of being caused trouble or difficulty, often resulting in disruption of plans or activities.
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