Dye Industries currently uses no debt,but its new CFO is considering changing the capital structure to 61.0% debt (w_d) by issuing bonds and using the proceeds to repurchase and retire some common shares so the percentage of common equity in the capital structure (w_c) = 1 - w_d.Given the data shown below,by how much would this recapitalization change the firm's cost of equity,i.e. ,what is r_L - r_U? Do not round your intermediate calculations.

Question

Dye Industries currently uses no debt,but its new CFO is considering changing the capital structure to 61.0% debt (w<sub>d</sub>) by issuing bonds and using the proceeds to repurchase and retire some common shares so the percentage of common equity in the capital structure (w<sub>c</sub>) = 1 - w<sub>d</sub>.Given the data shown below,by how much would this recapitalization change the firm's cost of equity,i.e. ,what is r<sub>L</sub> - r<sub>U</sub>? Do not round your intermediate calculations. A) 4.31% B) 5.23% C) 7.08% D) 6.77% E) 6.16%

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The Answer of Dye Industries currently uses no debt,but its new CFO is considering changing the capital structure to 61.0% debt (w_d)by issuing bonds and using the proceeds to repurchase and retire some common shares so the percentage of common equity in the capital structure (w_c)= 1 - w_d.Given the data shown below,by how much would this recapitalization change the firm's cost of equity,i.e. ,what is r_L - r_U? Do not round your intermediate calculations. A) 4.31% B) 5.23% C) 7.08% D) 6.77% E) 6.16%

Dye Industries Currently Uses No Debt,but Its New CFO Is