Glacier Inc. has no long-term debt. Its cost of equity is 12%, and its marginal tax...

 

Transcribed Image Text:

Glacier Inc. has no long-term debt. Its cost of equity is 12%, and its marginal tax rate is 0.34. The board of directors decided to change its capital structure such that the debt/equity ratio becomes 0.7. The company can borrow at an interest rate of 7%. Part 1 What was the WACC before the restructuring? 3+ decimals Submit Part 2 What is the new cost of equity? Attempt 1/10 for 10 pts. Attempt 1/10 for 10 pts. Part 3 What is the new WACC? Attempt 1/10 for 10 pts. Glacier Inc. has no long-term debt. Its cost of equity is 12%, and its marginal tax rate is 0.34. The board of directors decided to change its capital structure such that the debt/equity ratio becomes 0.7. The company can borrow at an interest rate of 7%. Part 1 What was the WACC before the restructuring? 3+ decimals Submit Part 2 What is the new cost of equity? Attempt 1/10 for 10 pts. Attempt 1/10 for 10 pts. Part 3 What is the new WACC? Attempt 1/10 for 10 pts.

Answer rating: 100% (QA)

1 Calculating the WACC before the restructuring The WACC Weighted Average Cost of Capital is a weigh... View the full answer