Williamson, Inc., has a debt-equity ratio of 1.8. The companys weighted average cost of capital is 9.1

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Williamson, Inc., has a debt-equity ratio of 1.8. The company’s weighted average cost of capital is 9.1 percent and its pretax cost of debt is 5.6 percent. The corporate tax rate is 21 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 debt-equity ratio were .60? What if it were 1.25?

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Corporate Finance Core Principles And Applications

ISBN: 9781260571127

6th Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

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Question Posted: Nov 13, 2020 05:00 AM

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Williamson, Inc., has a debt-equity ratio of 1.8. The companys weighted average cost of capital is 9.1

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a In a world with corporate taxes a firms weighted average cost of capital is equal to WACC BB S1 T ...View the full answer

Corporate Finance Core Principles And Applications

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