Question

Blitz Industries has a debt-equity ratio of 1.4. Its WACC is 7.6 percent, and its cost of debt is 5.3 percent. The corporate tax rate is 24 percent. |

a. |
What is the company’s 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.) |

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.) |

c-2. |
What would the cost of equity be if the debt-equity ratio were
1.0? |

c-3. |
What would the cost of equity be if the debt-equity ratio were
zero? |

Answer #1

Blitz Industries has a debt-equity ratio of .7. Its WACC is 8.9
percent, and its cost of debt is 6.2 percent. The corporate tax
rate is 21 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...

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...

Problem 16-12 Calculating WACC [LO1]
Blitz Industries has a debt-equity ratio of .9. Its WACC is 8.8
percent, and its cost of debt is 6.3 percent. The corporate tax
rate is 25 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...

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...

Weston Industries has a debt-equity ratio of .7. Its WACC is 8.9
percent, and its cost of debt is 6.2 percent. The corporate tax
rate is 21 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...

Weston Industries has a debt-equity ratio of 1.7. Its WACC is
7.9 percent, and its cost of debt is 5.6 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...

Weston Industries has a debt-equity ratio of 1.1. Its WACC is
7.3 percent, and its cost of debt is 5.1 percent. The corporate tax
rate is 21 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...

Weston Industries has a 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.
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...

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...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 52 seconds ago

asked 20 minutes ago

asked 30 minutes ago

asked 36 minutes ago

asked 41 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago