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Williamson, Inc., has a debt-equity ratio of 2.55. The company's weighted average cost of capital is 11 percent, and its pretax cost of debt is
Williamson, Inc., has a debt-equity ratio of 2.55. 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 and 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 and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Unlevered cost of equity c. What would the company's weighted average cost of capital be if the company's debt-equity ratio were .85 and 1.75? (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 Debt-equity ratio .85 Debt-equity ratio1.75 11%
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