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Evans Technology has the following capital structure. The aftertax cost of debt is 8 . 0 0 percent, and the cost of common equity (
Evans Technology has the following capital structure.
The aftertax cost of debt is percent, and the cost of common equity in the form of retained earnings is percent.
a What is the firm's weighted average cost of capital?
Note: Do not round intermediate calculations. Input your answers as a percent rounded to decimal places.
An outside consultant has suggested that because debt is cheaper than equity, the firm should switch to a capital structure that is
percent debt and percent equity.
Under this new and more debtoriented arrangement, the aftertax cost of debt is percent, and the cost of common equity in
the form of retained earnings is percent.
b Recalculate the firm's weighted average cost of capital.
Note: Do not round intermediate calculations. Input your answers as a percent rounded to decimal places.
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