Question
Williamson, Inc., has a debtequity ratio of 2.57. 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 2.57. 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 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.)
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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.)
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c. | What would the companys weighted average cost of capital be if the company's debtequity ratio were .65 and 1.60? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
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