15.21 AT&B has a debt-equity ratio of 2.5. Its rWACC is 15 percent and its cost of...

Question:

15.21 AT&B has a debt-equity ratio of 2.5. Its rWACC is 15 percent and its cost of debt is 11 percent. The corporate tax rate is 35 percent.

a. What is AT&B’s cost of equity capital?

b. What is AT&B’s unlevered cost of equity capital?

c. What would the weighted average cost of capital be if the debt-to-equity ratio was .75?

What if it were 1.5?

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