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Williamson, Inc., has a debt-to-equity ratio of 2.55. The firm's weighted average cost of capital is 11 percent, and its pretax cost of debt is
Williamson, Inc., has a debt-to-equity ratio of 2.55. The firm's weighted average cost of capital is 11 percent, and its pretax cost of debt is 5 percent. Williamson is subject to a corporate tax rate of 30 percent. a. What is Williamson's 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 Williamson's 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 Williamson's weighted average cost of capital be if the firm's debt-to-equity ratio were .85 and 1.75? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).)
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