Question
Williamson, Inc., has a debt-to-equity ratio of 2.47. The firms weighted average cost of capital is 9 percent, and its pretax cost of debt is
Williamson, Inc., has a debt-to-equity ratio of 2.47. The firms weighted average cost of capital is 9 percent, and its pretax cost of debt is 7 percent. Williamson is subject to a corporate tax rate of 40 percent. |
a. | What is Williamsons cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) |
Cost of equity capital | % |
b. | What is Williamsons unlevered cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) |
Unlevered cost of equity | % |
c. | What would Williamsons weighted average cost of capital be if the firms debt-to-equity ratio were .65 and 1.80? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) |
Weighted average cost of capital | |
Debtequity ratio .70 | % |
Debtequity ratio 1.40 | % |
PLEASE ANSWER ALL Question A, B and C! and please explain how to do this in excel |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started