Question
Garcia Company has no debt. Its cost of capital is 9.8 percent. Suppose the company converts to a debt-equity ratio of 1. The interest rate
Garcia Company has no debt. Its cost of capital is 9.8 percent. Suppose the company converts to a debt-equity ratio of 1. The interest rate on the debt is 6.9 percent. Ignore taxes for this problem.
What is the companys new cost of equity?
What is its new WACC?
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Gapenskis Understanding Healthcare Financial Management
Authors: George H. Pink, Paula H. Song
8th Edition
1640551093, 978-1640551091
