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 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. 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. 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. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Cost of equity |
% |
Get Answers For Free
Most questions answered within 1 hours.