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You are currently the CFO of a firm worth $1 billion and you are considering issuing some additional perpetual debt in order to change your firm's capital structure. Your current beta is 0.95 and you currently have $113 million in debt. You are planning to issue $229 million in additional perpetual debt. Your firm faces a 35% corporate tax rate. Given that the current risk free rate is 2.66% and the current market risk premium is 5.45%, what will be the new required return for your firm's equity holders?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92877299

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