Question 20 Clutch Co. is trying to estimate its optimal capital structure. Right now, Clutch has a capital structure th

[answerhappygod]

Question 20 Clutch Co Is Trying To Estimate Its Optimal Capital Structure Right Now Clutch Has A Capital Structure Th 1 (29.65 KiB) Viewed 14 times

Question 20 Clutch Co. is trying to estimate its optimal capital structure. Right now, Clutch has a capital structure that consists of 20 percent debt and 80 percent equity. The risk-free rate is 3% and the market risk premium, (KM-KRF), is 6%. Currently the company's cost of equity, which is based on the CAPM, is 12% and its tax rate is 25%. What would be Clutch's estimated cost of equity if it were to change its capital structure to 30% debt and 70% equity? a. 13.38% O b. 14.71% O c. 15.67% O d. 14.25% 4 pts e. 13.02%