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Williamson, Inc., has a debt-equity ratio of 2.40. The company's weighted average cost of capital is 11 percent, and its pretax cost of debt is
Williamson, Inc., has a debt-equity ratio of 2.40. The company's weighted average cost of capital is 11 percent, and its pretax cost of debt is 5 percent. The corporate tax rate is 25 percent. | |
a. | What is the company's cost of equity capital? |
b. | What is the company's unlevered cost of equity capital? |
c. | What would the weighted average cost of capital be if the company's debt-equity ratio were .80 and 1.95? |
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