Question
Williamson, Inc., has a debtequity ratio of 2.42. The company's weighted average cost of capital is 10 percent, and its pretax cost of debt is
Williamson, Inc., has a debtequity ratio of 2.42. The company's weighted average cost of capital is 10 percent, and its pretax cost of debt is 6 percent. The corporate tax rate is 35 percent.
a.What is the company's cost of equity capital?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Cost of equity capital%
b.What is the company's unlevered cost of equity capital?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Unlevered cost of equity%
c.What would the weighted average cost of capital be if the company's debtequity ratio were .70 and 1.85?(Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Weighted average cost of capital?
Debt-equity ratio .70_____%
Debt-equity ratio 1.85%
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