Dyson Inc.currently finances with 20.0% debt (i.e.,w_d = 20%) ,but its new CFO is considering changing the capital structure so w_d = 60.0% by issuing additional bonds and using the proceeds to repurchase and retire 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? (Hint: You must unlever the current beta and then use the unlevered beta to solve the problem.)

Question

Dyson Inc.currently finances with 20.0% debt (i.e.,w<sub>d</sub> = 20%) ,but its new CFO is considering changing the capital structure so w<sub>d</sub> = 60.0% by issuing additional bonds and using the proceeds to repurchase and retire 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? (Hint: You must unlever the current beta and then use the unlevered beta to solve the problem.) A) 4.05% B) 4.50% C) 4.95% D) 5.45% E) 5.99%

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The Answer of Dyson Inc.currently finances with 20.0% debt (i.e.,w_d = 20%),but its new CFO is considering changing the capital structure so w_d = 60.0% by issuing additional bonds and using the proceeds to repurchase and retire 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? (Hint: You must unlever the current beta and then use the unlevered beta to solve the problem.) A)4.05% B)4.50% C)4.95% D)5.45% E)5.99%

Dyson IncCurrently Finances with 20