Question
Weston Industries has a debtequity ratio of 1.1. Its WACC is 7.0 percent, and its cost of debt is 5.6 percent. The corporate tax rate
Weston Industries has a debtequity ratio of 1.1. Its WACC is 7.0 percent, and its cost of debt is 5.6 percent. The corporate tax rate is 35 percent. |
a. | What is Westons cost of equity capital? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
b. | What is Westons unlevered cost of equity capital? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
c-1 | What would the cost of equity be if the debtequity ratio were 2? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
c-2 | What would the cost of equity be if the debtequity ratio were 1.0? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
c-3 | What would the cost of equity be if the debtequity ratio were zero? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
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