Suppose that Ms. Macbeth's investment bankers have informed her that since the new issue of debt is risky, debt holders will demand a return of 12.5%, which is 2.5% above the risk-free interest rate.a. What are rA and rE?b. Suppose that the beta of the unlevered stock was .6. What will A, E, and D be after the change to the capital structure?
Attachment:- 118022_1_FINC600-Week-5.xlsx