Question
Gamer Co. has no debt. Its cost of capital is 9.4 percent. Suppose the company converts to a debt-equity ratio of 1.0. The interest rate
Gamer Co. has no debt. Its cost of capital is 9.4 percent. Suppose
the company converts to a debt-equity ratio of 1.0. The interest rate on the
debt is 6.1 percent. Ignoring taxes, what is the company's new cost of
equity? What is its new WACC?
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Financial Modeling
Authors: Simon Benninga
4th Edition
0262027283, 9780262027281
