Dyson Inc.currently finances with 20.0% debt (i.e. ,wd = 20%) ,but its new CFO is considering changing the capital structure so wd = 36.0% by issuing additional bonds and using the proceeds to repurchase and retire common shares so the percentage of common equity in the capital structure (wc) = 1 - wd.Given the data shown below,by how much would this recapitalization change the firm's cost of equity? Do not round your intermediate calculations.(Hint: You must unlever the current beta and then use the unlevered beta to solve the problem. )
A) 1.61%
B) 1.66%
C) 1.24%
D) 1.68%
E) 1.69%
Correct Answer:
Verified
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