Morales Publishing tax rate is 40%, its Beta is 1.20, and it uses no debt. However, the CFO is considering moving to a capital structure with 30% debt and 70% equity. If the risk free is 4% and the market risk premium is 6%, how much is the firms cost of equity before and after capital structure change respectively?

Morales Publishing tax rate is 40%, its Beta is 1.20, and it uses no debt. However, the CFO is considering moving to a capital structure with 30% debt and 70% equity. If the risk free is 4% and the market risk premium is 6%, how much is the firms cost of equity before and after capital structure change respectively?

Morales Publishing tax rate is 40%, its Beta is 1.20, and it uses no debt. However, the CFO is considering moving to a capital structure with 30% debt and 70% equity. If the risk free is 4% and the market risk premium is 6%, how much is the firms cost of equity before and after capital structure change respectively?