(Answered) Cost of equity and capital

How will Rensselaer Felt's WACC and cost of equity change if it issues $ 50 million in new equity and uses the proceeds to retire long- term debt? Assume the company's borrowing rates are unchanged. Use the three- step procedure.;Step 1 Calculate the opportunity cost of capital.;Step 2 Estimate the cost of debt, r D, at the new debt ratio, and calculate the new cost of equity.;Step 3 Recalculate the weighted- average cost of capital at the new financing weights.
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Cost of equity and capital

 


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