Unida Systems has

41

million shares outstanding trading for

$8

per share. In addition, Unida has

$91

million in outstanding debt. Suppose Unida's equity cost of capital is

12%,

its debt cost of capital is

9%,

and the corporate tax rate is

34%.

a. What is Unida's unlevered cost of capital?

b. What is Unida's after-tax debt cost of capital?

c. What is Unida's weighted average cost of capital?

Question content area bottom

Part 1

a. What is Unida's unlevered cost of capital?

Unida's unlevered cost of capital is

31.1131.11%.

(Round