HAMADA EQUATION Cyclone Software Co. is trying to establish its optimal capital structure. Its… 1 answer below »
HAMADA EQUATION Cyclone Software Co. is intricate to institute its optimal chief edifice. Its present chief edifice consists of 25% claim and 75% equity; notwithstanding, the CEO believes that the solid should use over claim. The betray-free reprimand, rRF, is 5%; the market betray guerdon, RPM, is 6%; and the solid’s tax reprimand is 40%. Currently, Cyclone’s absorb of equity is 14%, which is stable by the CAPM. What would be Cyclone’s estimated absorb of equity if it alterable its chief edifice to 50% claim and 50% equity?