P12-26 (similar to)

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Unida Systems has

38

million shares outstanding trading for

$9

per share. In addition, Unida has

$97

million in outstanding debt. Suppose Unida's equity cost of capital is

18%,

its debt cost of capital is

7%,

and the corporate tax rate is

31%.

a. What is Unida's unlevered cost of capital?

b. What is Unida's after-tax debt cost of capital?

c. What is Unida's weighted average cost of capital?

a. What is Unida's unlevered cost of capital?

Unida's unlevered cost of capital is nothing%.

(Round to one decimal place.)