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Find the new cost of equity

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ABC Company has a cost of equity of 12%. EBIT is 100. They currently have no debt. Find the new cost of equity if they changed to using a capital structure that used 30% debt and 70% equity. The interest rate on the debt is 4% and the tax rate is 35%.

Please Provide explanation why is your answer correct !! Provide formulas too

Reference no: EM131419815

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