Calculating WACC Weston Industries has a debtequity ratio of 1.5. Its WACC is 12 per cent, and

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Calculating WACC Weston Industries has a debt–equity ratio of 1.5. Its WACC is 12 per cent, and its cost of debt is 12 per cent. The corporate tax rate is 35 per cent.

(a) What is Weston’s cost of equity capital?

(b) What is Weston’s unlevered cost of equity capital?

(c) What would the cost of equity be if the debt–equity ratio were 2? What if it were 1.0? What if it were zero?

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