What is its p-e after refinancing

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Reference no: EM131553668

Assume a company is 100% equity financed. Its earnings is $1, its initial P/E ratio is 10. Itsr=10%, g=0%. If the firm refinances to 50% debt (with 5% cost of capital) and 50% equity (with 15%cost of capital), what is its P/E after refinancing (no tax)?

Reference no: EM131553668

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