Question
Blue Sea Inc. is a company with a D/E of 1. Currently shareholders expect a return of 12%, whilst debt has a cost of 5%.
Blue Sea Inc. is a company with a D/E of 1. Currently shareholders expect a return of 12%, whilst debt has a cost of 5%. The tax rate is 25%. What is the WACC of this company?
1) What is the WACC of the same company if it changes its D/E to 0?
2) What would be the cost of equity of the same company if it changed its D/E to 3?
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Current DE of 1 Shareholders return cost of equity is 12 Debt cost is 5 Tax rate is 25 Heres t...
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
