Question
Crosby Industries has a debt-equity ratio of 1.4. Its WACC is 14 percent, and its cost of debt is 9 percent. There is no corporate
Crosby Industries has a debt-equity ratio of 1.4. Its WACC is 14 percent, and its cost of debt is 9 percent. There is no corporate tax. |
Requirement 1: |
What is Crosbys cost of equity capital? (Do not round intermediate calculations. Input your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
Cost of equity | % |
Requirement 2: |
(a) | What would the cost of equity be if the debt-equity ratio were 2? (Do not round intermediate calculations. Input your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
Cost of equity | % |
(b) | What would the cost of equity be if the debt-equity ratio were 0.4? (Do not round intermediate calculations. Input your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
Cost of equity | % |
(c) | What would the cost of equity be if the debt-equity ratio were zero? (Do not round intermediate calculations. Input your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
http://lectures.mhhe.com/connect/0077511204/guided_examples/Chapter%2013/13-10.mp4
Cost of | % |
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