Question

Williamson, Inc., has a debt?equity ratio of 2.48. 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 company'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 the company'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 the weighted average cost of capital be if the company's debt?equity ratio were .65 and 1.55? (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 Debt–equity ratio .65 % Debt–equity ratio 1.55 %

Answer 1