Question

WB Industries has a debt-equity ratio of .8. Its WACC is 9.2 percent, and its cost of debt is 4.9 percent. The corporate tax rate is 35 percent. What is the company's cost of equity capital? What is the above company's unlevered cost of equity capital? What would the cost of equity be if the debt-equity ratio were .95?

Answer #1

Detailed solution is provided.

WB Industries has a debt-equity ratio of .8. Its WACC is 9.2
percent, and its cost of debt is 4.9 percent. The corporate tax
rate is 35 percent.
What would the cost of equity be if the debt-equity ratio were
.95?
12.84%
15.83%
14.58%
22.59%
23.45%

Blitz Industries has debt-equity ratio of 1.3. Its WACC is 8.5
percent, and its cost of debt is 6.2 percent. The corporate tax
rate is 22 percent. What is the company's cost of equity capital?
What is the company's unlevered cost of equity capital? What would
the cost of equity be if the debt-equity ratio were 2, 1.0, and
0?

3. Maxwell Industries has a debt– equity ratio of 1.5. Its WACC
is 11 percent, and its cost of debt is 8 percent. The corporate tax
rate is 35 percent. a. What is Maxwell’s cost of equity capital? b.
What is Maxwell’s unlevered cost of equity capital?

Weston Industries has a debt-equity ratio of 1.8. Its WACC is 14
percent, and its cost of debt is 12 percent. The corporate tax rate
is 36 percent. (Round your answers to 2 decimal places.
(e.g., 32.16))
Required:
a.
Weston’s cost of equity capital is __x__ percent.
b.
Weston’s unlevered cost of equity capital is __y__
percent.
c.
The cost of equity would be __z__ percent if the debt-equity
ratio were 2, __xx__ percent if the debt-equity...

Skillet Industries has a debt–equity ratio of 1.1. Its WACC is
7.0 percent, and its cost of debt is 5.6 percent. The corporate tax
rate is 35 percent.
a.
What is the company’s cost of equity capital? (Round
your answer to 2 decimal places. (e.g., 32.16))
Cost of equity capital
%
b.
What is the company’s unlevered cost of equity capital?
(Round your answer to 2 decimal places. (e.g.,
32.16))
Unlevered cost of equity capital
%
...

Weston Industries has a debt-equity ratio of 1.2. Its WACC is
7.4 percent, and its cost of debt is 5.1 percent. The corporate tax
rate is 22 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.) 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...

Twice Shy Industries has a debt?equity ratio of 1.6. Its WACC is
8.4 percent, and its cost of debt is 6.9 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...

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...

Twice Shy Industries has a debt−equity ratio of 1.2. Its WACC is
9 percent, and its cost of debt is 5.7 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...

Twice Shy Industries has a debt−equity ratio of 1.4. Its WACC is
9.4 percent, and its 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. Enter your answer as a percent rounded
to 2 decimal places, e.g., 32.16.) Cost of equity capital
16.46%
b. What is the company’s unlevered cost of equity capital? (Do
not round intermediate calculations. Enter your answer as...

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