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Rajan Inc has a debt - equity ratio of 2 . 5 . The firm s weighted average cost of capital is 1 5 percent,
Rajan Inc has a debtequity ratio of The firms weighted average cost of
capital is percent, and its pretax cost of debt is percent. Rajan is subject
to a corporate tax rate of percent.
a What is Rajans cost of equity capital?
b What is Rajans unlevered cost of equity capital?
c What would Rajans weighted average cost of capital be if the firms
debtequity ratio were
d What would Rajans weighted average cost of capital be if the firms
debtequity ratio were
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