Question
If it were unlevered, the overall firm beta for Wild Widgets Inc. (WWI) would be 1. WWI has a target debt/equity ratio of 0.6. The
If it were unlevered, the overall firm beta for Wild Widgets Inc. (WWI) would be 1. WWI has a target debt/equity ratio of 0.6. The expected return on the market is 0.13, and Treasury bills are currently selling to yield 0.03. WWI one-year bonds (with a face value of $1,000) carry an annual coupon of 8% and are selling for $967.28. The corporate tax rate is 38%.(Round your answers to 2 decimal places before the percentage sign. (e.g., 10.23%))
a.WWIs before-tax cost of debt is %.
b.WWIs cost of equity is %.
c.WWIs weighted average cost of capital is %.
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