Question
Williamson, Inc., has a debtequity ratio of 2.59. The company's weighted average cost of capital is 10 percent, and its pretax cost of debt is
Williamson, Inc., has a debtequity ratio of 2.59. The company's weighted average cost of capital is 10 percent, and its pretax cost of debt is 6 percent. The corporate tax rate is 35 percent. a. What is the companys cost of equity capital? ( enter answer as a percent rounded to 2 decimal places) Cost of equity capital %
b. What is the companys unlevered cost of equity capital? (enter answer as a percent rounded to 2 decimal places) Unlevered cost of equity %
c. What would the companys weighted average cost of capital be if the company's debtequity ratio were .75 and 1.70? ( enter answers as a percent rounded to 2 decimal places)
Weighted average cost of capital
Debtequity ratio = .75 %
Debtequity ratio = 1.70 %
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