How would the firm cost of equity change if at all

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Reference no: EM131875620

A firm finances its operations with $50M of equity at a required return of 15% and $50M of bonds at a required return of 9%. Suppose the firm issues $10M of additional bonds at 9% annual interest rate to retire some of its equity.

(A) How would the firm’s cost of capital change if at all?

(B) How would the firm’s cost of equity change if at all?

Reference no: EM131875620

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