Portneuf Industries has a debt-equity ratio of 1.5. Its WACC is 8.4%, and its cost of debt is 5.9%. The corporate tax rate is 35%. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.) a. What is the company's cost of equity capital? Cost of equity capital 2.65 % b. What is the company's unlevered cost of equity capital? Unlevered cost of equity capital c-1. What would the cost of equity be if the debt-equity ratio were 2? Cost of equity Cost of equity 0.73 % c-2. What would the cost of equity be if the debt-equity ratio were 1.0? Cost of equity 2.65% % c-3. What would the cost of equity be if the debt-equity ratio were zero? 11.5 1%

Portneuf Industries has a debt-equity ratio of 1.5. Its WACC is 8.4%, and its cost of debt is 5.9%. The corporate tax rate is 35%. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.) a. What is the company's cost of equity capital? Cost of equity capital 2.65 % b. What is the company's unlevered cost of equity capital? Unlevered cost of equity capital c-1. What would the cost of equity be if the debt-equity ratio were 2? Cost of equity Cost of equity 0.73 % c-2. What would the cost of equity be if the debt-equity ratio were 1.0? Cost of equity 2.65% % c-3. What would the cost of equity be if the debt-equity ratio were zero? 11.5 1%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 2P

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