Question
Williamson, Inc., has a debtequity ratio of 2.44. The company's weighted average cost of capital is 9 percent, and its pretax cost of debt is
Williamson, Inc., has a debtequity ratio of 2.44.
The company's weighted average cost of capital is 9 percent, and its pretax cost of debt is 7 percent.
The corporate tax rate is 40 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 20.71 % 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 12.60 % c. What would the weighted average cost of capital be if the company's debtequity ratio were .60 and 1.75? (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 .60 | % |
Debtequity ratio 1.75 | % |
HELP!!! I can get A and B but for some reason the calculation isn't producing the correct cost of capital for questions C!!!
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