Question
Kunitz Co. has no debt. Its cost of capital is 8.7 percent. Suppose Kunitz converts to a debt-equity ratio of 1.0. The interest rate on
Kunitz Co. has no debt. Its cost of capital is 8.7 percent. Suppose Kunitz converts to a debt-equity ratio of 1.0. The interest rate on the debt is 6.3 percent. Ignoring taxes, what is the company's new cost of equity? What is its new WACC?
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Financial Management For Public Health And Not For Profit Organizations
Authors: Steven A. Finkler
2nd Edition
0131471988, 978-0131471986
