Williamson Inc. has a debt-to-equity ratio of 2.60. The firm's WACC is 9 percent, and its pretax cost of debt is 7 percent. Williamson is subject to a corporate tax rate of 40 percent. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. What is Williamson's cost of equity capital? Cost of equity capital % b. What is Williamson's unlevered cost of equity capital? Unlevered cost of equity % c. What would Williamson's WACC be if the firm's debt-to-equity ratio were 0.80? 1.80? Debt-to-equity ratio 0.80 Debt-to-equity ratio 1.80 Weighted average cost of capital

Williamson Inc. has a debt-to-equity ratio of 2.60. The firm's WACC is 9 percent, and its pretax cost of debt is 7 percent. Williamson is subject to a corporate tax rate of 40 percent. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. What is Williamson's cost of equity capital? Cost of equity capital % b. What is Williamson's unlevered cost of equity capital? Unlevered cost of equity % c. What would Williamson's WACC be if the firm's debt-to-equity ratio were 0.80? 1.80? Debt-to-equity ratio 0.80 Debt-to-equity ratio 1.80 Weighted average cost of capital

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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