A firm has zero debt in its capital structure.Its overall cost of capital is 13%.The firm is considering a new capital structure with 55% debt.The interest rate on the debt would be 7%.Assuming there are no taxes or other imperfections,its cost of equity capital with the new capital structure would be:
A)12.00%
B)13.67%
C)17.53%
D)20.33%
E)None of the above.

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The Answer of A firm has zero debt in its capital structure.Its overall cost of capital is 13%.The firm is considering a new capital structure with 55% debt.The interest rate on the debt would be 7%.Assuming there are no taxes or other imperfections,its cost of equity capital with the new capital structure would be:
A)12.00%
B)13.67%
C)17.53%
D)20.33%
E)None of the above.

A Firm Has Zero Debt in Its Capital Structure