Item11

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Item 11

Byrd Enterprises has no debt. Its current total value is $50.6 million. Assume the company sells $20.2 million in debt.

Ignoring taxes, what is the debt-equity ratio?

Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

Assume the companys tax rate is 23 percent. What is the debt-equity ratio?

Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

Garcia Company has no debt. Its cost of capital is 9.6 percent. Suppose the company converts to a debt-equity ratio of 1. The interest rate on the debt is 6.7 percent. Ignore taxes for this problem.

What is the companys new cost of equity?

Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

What is its new WACC?

Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.