5 Dye Industries currently uses no debt, but its new CFO is considering changing the capital structure to 40.0% debt (wd) by issuing bonds and using the proceeds to repurchase and retire common shares so the percentage of common equity in the capital structure (wc) = 1 – wd.  Given the data shown below, by how much would this recapitalization change the firm's cost of equity, i.e., what is rL - rU? Risk-free rate, rRF            6.00%                  Tax rate, T      30% Market risk premium, RPM      4.00%                  Current wd      0% Current beta, bU             1.15                  Target wd      40%   Group of answer choices 1.66% 2.15% 2.23% 2.02% 2.45% 1.84%

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