Mgm S Capital Structure Makes Up Of 700 000 Common Shares Which Have A Current M

MGM’s capital structure makes up of 700,000 common shares which have a current market price of $13 per share .It is an assumption that firm’s weighted average cost of capital (WACC) could be reduced if it issues 1.5 million of long term debt and utilize the proceed to purchase and then retire 120,000 common shares.If MGM undertakes this assumption to alter the capital structure,explain its impact on cost of common equity.

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