Question
Williamson, Inc., has a debtequity ratio of 2.46. 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 2.46. 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 companys cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity capital -------------%
b. What is the companys unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Unlevered cost of equity
c. What would the companys weighted average cost of capital be if the company's debtequity ratio were .75 and 1.65? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Weighted average cost of capital Debtequity ratio = .75
Debtequity ratio = 1.65
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