What interest rate would a firm have to promise debt

Reference no: EM13850578

What interest rate would a firm have to promise debt holders to make an investor indifferent between holding debt or shares in the company? How does the return to equity owners change with the proportion of the investment that is provided by debt? That is, how does the return change with a. Also provide an explanation as to why the expected return increases or decreases.

Reference no: EM13850578

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