Blue Sea Inc. is a company with a D/E of 1. Currently shareholders expect a return of

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Blue Sea Inc. is a company with a D/E of 1. Currently shareholders expect a return of 12%, whilst debt has a cost of 5%. The tax rate is 25%. What is the WACC of this company?

1) What is the WACC of the same company if it changes its D/E to 0?

2) What would be the cost of equity of the same company if it changed its D/E to 3?

Related Book For answer-question

Income Tax Fundamentals 2013

ISBN: 9781285586618

31st Edition

Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill

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Posted Date: Nov 03, 2023 03:04 AM

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Blue Sea Inc. is a company with a D/E of 1. Currently shareholders expect a return of

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Current DE of 1 Shareholders return cost of equity is 12 Debt cost is 5 Tax rate is 25 Heres t... View the full answer

Income Tax Fundamentals 2013

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