Question
Blitz Industries has a debt-equity ratio of 0.6. Its wacc is 9.1%, and its cost of debt is 6.4%. The corporate tax rate is 22%.
Blitz Industries has a debt-equity ratio of 0.6. Its wacc is 9.1%, and its cost of debt is 6.4%. The corporate tax rate is 22%.
a. What is the company's cost of equity capital? b. what is the company's unlevered cost of equity capital? c-1. what would the cost of equity be if the debt-equity ratio were 2? c-2. what would the cost of equity be if the debt-equity ratio were 1.0? c-3. what would the cost of equity be if debt-equity Ratio or zero?
*for all answers* (Do not round intermediate calculations and enter your s a percent rounded to 2 decimal places, e.g., 32.16)
~ please show work thank you, sorry for the technical difficulties.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started