Dyson IncCurrently Finances with 20

question 81

Multiple Choice

Dyson Inc.currently finances with 20.0% debt (i.e. ,w_d = 20%) ,but its new CFO is considering changing the capital structure so w_d = 62.5% by issuing additional bonds and using the proceeds to repurchase and retire common shares so the percentage of common equity in the capital structure (w_c) = 1 - w_d.Given the data shown below,by how much would this recapitalization change the firm's cost of equity? Do not round your intermediate calculations.(Hint: You must unlever the current beta and then use the unlevered beta to solve the problem. ) ​

• A) 9.18%
• B) 10.93%
• C) 11.39%
• D) 11.48%
• E) 9.64%

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