Question
Lenovo Computers has a debt to equity ratio of 3, and they are paying an interest rate of 6%. The tax rate is 15%. The
Lenovo Computers has a debt to equity ratio of 3, and they are paying an interest rate of 6%. The tax rate is 15%.
The Weighted Average Cost of Capital is 10.8%
1. What is cost of equity capital for Lenovo computers?
2. What is Lenovos unlevered cost of equity capital?
3. Which would be the WACC if the Debt to Equity ratio changes to 2?
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Entrepreneurial Finance
Authors: Philip J. Adelman, Alan M. Marks
4th Edition
0132434792, 9780132434799
