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Dickson, Inc., has a debt-equity ratio of 2.35. The firms weighted average cost of capital is 12 percent and its pretax cost of debt is
Dickson, Inc., has a debt-equity ratio of 2.35. The firms weighted average cost of capital is 12 percent and its pretax cost of debt is 9 percent. The tax rate is 24 percent. a) What is the companys cost of equity capital? b) What is the companys unlevered cost of equity capital? c) What would the companys weighted average cost of capital be if the company's debt-equity ratio was 1.35?
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