Garcia Co. has no debt. Its cost of capital is 9.4 percent. Suppose the company converts to

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Garcia Co. has no debt. Its cost of capital is 9.4 percent. Suppose the company converts to a debt-equity ratio of 1.0. The interest rate on the debt is 5.3 percent. Ignoring taxes, what is the company’s new cost of equity? What is its new WACC?

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Essentials Of Corporate Finance

ISBN: 9781265414962

11th Edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

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Question Posted: Jan 02, 2023 07:08 AM

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Garcia Co. has no debt. Its cost of capital is 9.4 percent. Suppose the company converts to

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