Question
Laurier Corp. has no debt but can borrow at 6.4%. The firms WACC is currently 9.5%, and the tax rate is 35%. a. What is
Laurier Corp. has no debt but can borrow at 6.4%. The firms WACC is currently 9.5%, and the tax rate is 35%.
a. What is the companys cost of equity?
b. If the firm converts to 25% debt, what will its cost of equity be?
c. If the firm converts to 50% debt, what will its cost of equity be?
d. What is the companys WACC in part (b)? In part (c)?
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Case Studies In Finance
Authors: Robert Bruner, Kenneth Eades, Michael Schill
6th Edition
0073382450, 978-0073382456
