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Problem 16-25 MM with Taxes Dickson, Incorporated, has a debt-equity ratio of 2.75 . The firm's weighted average cost of capital is 12 percent and
Problem 16-25 MM with Taxes Dickson, Incorporated, has a debt-equity ratio of 2.75 . The firm's weighted average cost of capital is 12 percent and its pretax cost of debt is 8 percent. The tax rate is 22 percent. a. What is the company's cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company's unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What would the company's weighted average cost of capital be if the company's debtequity ratio were .35 and 1.75 ? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
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