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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
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 25 percent. A 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.) 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.) c. What would the 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.) Answer is complete but not entirely correct. a. Cost of equity 29.49 % b. Unlevered cost of equity 13.41 % C. WACC at debt-equity ratio of .85 17.66% WACC at debt-equity ratio of 11.34 % 1.75 Prev 2 of 5 Nevt
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