Dickson, Inc., has a debt-equity ratio of 2.3. The firms weighted average cost of capital is 9
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Dickson, Inc., has a debt-equity ratio of 2.3. The firm’s weighted average cost of capital is 9 percent and its pretax cost of debt is 5.3 percent. The tax rate is 24 percent.
a. What is the company’s cost of equity capital?
b. What is the company’s unlevered cost of equity capital?
c. What would the company’s weighted average cost of capital be if the firm’s debt-equity ratio were .75? What if it were 1.3?
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Related Book For 
Corporate Finance
ISBN: 9781260772388
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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