Question
Brady Co. has no debt but can borrow at 7 percent. The firms WACC is currently 10 percent, and the tax rate is 30 percent.
Brady Co. has no debt but can borrow at 7 percent. The firms WACC is currently 10 percent, and the tax rate is 30 percent.
a. What is Bradys cost of equity?
b. If the firm converts to 25 percent debt, what will its cost of equity be?
c. If the firm converts to 50 percent debt, what will its cost of equity be?
d. What is Bradys WACC in part (b)? In part (c)?
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The Handbook For Investment Committee Members
Authors: Russell L. Olson
1st Edition
0471719781, 978-0471719786
