Question
Problem 16-12 Calculating WACC [LO1] Twice Shy Industries has a debt?equity ratio of 1.4. Its WACC is 9.4 percent, and its cost of debt is
Problem 16-12 Calculating WACC [LO1]
Twice Shy Industries has a debt?equity ratio of 1.4. Its WACC is 9.4 percent, and its cost of debt is 6.7 percent. The corporate tax rate is 35 percent. |
a. | What is the company?s cost of equity capital?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Cost of equity capital | % |
b. | What is the company?s unlevered cost of equity capital?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Unlevered cost of equity capital | % |
c-1 | What would the cost of equity be if the debt?equity ratio were 2?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Cost of equity | % |
c-2 | What would the cost of equity be if the debt?equity ratio were 1.0?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Cost of equity | % |
c-3 | What would the cost of equity be if the debt?equity ratio were zero?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Cost of equity | % |
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