Question

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. |

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 ratio were 1, and __yy__ percent if the debt-equity ratio were 0. |

Answer #1

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...

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 1.4. 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...

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
%
...

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?

Crosby Industries has a debt–equity ratio of 1.4. Its WACC is 14
percent, and its cost of debt is 9 percent. There is no corporate
tax.
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
%
b. What would the cost of equity be if the
debt–equity ratio were 2? (Do not round intermediate
calculations and enter your...

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...

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