Question
Williamson, Inc., has a debtequity ratio of 2.43. The company's weighted average cost of capital is 11 percent, and its pretax cost of debt is
Williamson, Inc., has a debtequity ratio of 2.43. 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 30 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 29.22 % 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 .65 and 1.80? (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 | |
Debtequity ratio .65 | % |
Debtequity ratio 1.80 | % |
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