Weston Industries has a debt–equity ratio of 1.4. Its WACC is 9.4 percent, and its pretax cost of debt is 6.7 percent. The corporate tax rate is 35 percent. |
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.) |
Cost of equity capital | % |
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.) |
Unlevered cost of equity capital | % |
c-1. |
What would the cost of equity be if the debt–equity ratio were 2? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Cost of equity | % |
c-2. |
What would the cost of equity be if the debt–equity ratio were 1.0? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Cost of equity | % |
c-3. |
What would the cost of equity be if the debt–equity ratio were zero? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Cost of equity | % |
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