Citee Corp. has no debt but can borrow at 6.6 percent. The firms WACC is currently 8.8
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Question:
Citee Corp. has no debt but can borrow at 6.6 percent. The firm’s WACC is currently 8.8 percent, and the tax rate is 24 percent.
a. What is the company’s cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. If the firm converts to 35 percent debt, what will its cost of equity be?
c. If the firm converts to 60 percent debt, what will its cost of equity be?
d-1. If the firm converts to 35 percent debt, what is the company’s WACC?
d-2. If the firm converts to 60 percent debt, what is the company’s WACC?
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1260153590
12th edition
Authors: Stephen M. Ross, Randolph W Westerfield, Robert R. Dockson, Bradford D Jordan
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