Question
The Jean Outlet is an all-equity firm but can borrow at 5.8 percent. The firm's WACC is currently 12.5 percent, and the tax rate is
The Jean Outlet is an all-equity firm but can borrow at 5.8 percent. The firm's WACC is currently 12.5 percent, and the tax rate is 28 percent. Consider taxes.
1.What is the company's cost of equity?
2.If the firm converts to 20 percent debt, what will its cost of equity be?
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Fundamentals of Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
11th edition
77861701, 978-0077861704
