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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