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Pink Pony, Inc. has a pre-tax cost of debt of 8%. Pink Ponys common stock has a beta of 1.7. Market returns are 8.2% and
Pink Pony, Inc. has a pre-tax cost of debt of 8%. Pink Ponys common stock has a beta of 1.7. Market returns are 8.2% and the risk-free rate of return is 1%. The tax rate is 21%. If Pink Pony maintains a debt to equity ratio of 1.2 or 120%, what is its weighted average cost of capital? (Round all calculations to four decimal places.)
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