Archimedes Levers is financed by a mixture of debt and equity. You have the foll

Question

Archimedes Levers is financed by a mixture of debt and equity. You have the following information about its cost of capital:

Suppose now that Archimedes repurchases debt and issues equity so that D/V = 0.35. The reduced borrowing causes rD to fall to 11%. Calculate the rE, rA, ?E, ?D, and ?A. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

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Archimedes Levers is financed by a mixture of debt and equity. You have the following information about its cost of capital:

Explanation / Answer

formulae :::

rE = rf + bE (rm

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