a)Now think about how this estimate should change if Compass uses less debt:

a)   Now think about how this estimate should change if Compass uses less debt:

i)    Compass’s financing mix is currently 57% equity and 43% debt (based on market values); what would its Cost of Equity be if it used 100% equity financing?

ii)   What would its Cost of Equity be if it shifted to 65% equity financing and 35% debt?

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