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Wentworth Industries is 100% equity financed. Its current beta is 1.2. The expected market rate of return is 14% the risk-free rate is 9%. Round
Wentworth Industries is 100% equity financed. Its current beta is 1.2. The expected market rate of return is 14% the risk-free rate is 9%. Round your answers to two decimal places. 10.12% would be shown as 10.12 a. Calculate Wentworth's cost of equity b. If Wentworth changes its capital structure to 40% debt, it estimates that its beta will increase to 1.4. The after-tax cost of debt will be 6%. What is Wentworth's new WACC? C. Should Wentworth make the capital structure change? Yes or no
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