The dropdown options are 4.0, 3.4, 3.6, and 4.2 for the D / E Ratio. The dropdown options are 1.484, 1.707, 1.558, and 1.410 for the Leveraged Beta (b). The dropdown options are 19.433%, 26.990%, 21.592%, and 20.512% for the Cost of Equity (rs). The dropdown options are 14.197%, 15.431%, 12.345%, and 13.580% for the first WACC and 12.944%, 18.607%, 13.753%, and 16.180% for the second. Thank you!

Green Goose Automation Company currently has no debt in its capital structure, but it is considering using some debt and reducing its outstanding equity. The firm's unlevered beta is 1.25, and its cost of equity is 11.75%. Because the firm has no debt in its capital structure, its weighted average cost of capital (WACC) also equals 11.75%. The risk-free rate of interest (TRF) is 3%, and the market risk premium (RPM) is 7%. Green Goose's marginal tax rate is 25%. Green Goose is examining how different levels of debt will affect its costs of debt and equity, as well as its WACC. The firm has collected the financial information that follows to analyze its weighted average cost of capital (WACC). Complete the following table. D/Cap Ratio E/Cap Ratio Bond Rating D/E Ratio 0.00 WACC Cost of Equity ( rs) 11.75% Before-Tax Cost of Debt ( Levered Beta ra) (b) 1.25 8.4% 1.484 0.0 1.0 11.75% 0.2 0.8 0.25 A 13.388% 11.970% 0.4 0.6 0.67 BBB 8.9% 1.875 16.125% 0.6 0.4 1.50 BB 11.1% 2.656 13.632% 0.8 0.2 4.00 14.3% 5.000 38.000%