Question: 6. Prokter and Gtamble (PG) has historically maintained a debt-to-equity ratio (D/E) of approximately 0.3. Its cost ofequity is 7.5% and it can borrow at

6. Prokter and Gtamble (PG) has historically maintained a debt-to-equity ratio

6. Prokter and Gtamble (PG) has historically maintained a debt-to-equity ratio (D/E) of approximately 0.3. Its cost ofequity is 7.5% and it can borrow at 4.3%. PG's tax rate is 40%. PG believes it can increase debt without any serious risk of distress or other costs. With a higher debt-to-equity ratio of 05, it believes its borrowing costs will rise only slightly to 4.6%. a) Determine PG's current (before increasing its debt-to-equity ratio) asset return a b) Determine PG's WACC (wacc after PG raises its debt-to-equity ratio to 0.5

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