Question: I'm having problems with c and d-2. Here's the question? Shadow Corp. has no debt but can borrow at 6.7 percent. The firms WACC is
I'm having problems with c and d-2. Here's the question?
Shadow Corp. has no debt but can borrow at 6.7 percent. The firms WACC is currently 8.5 percent, and the tax rate is 35 percent.
| a. | What is Shadows cost of equity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) |
| Cost of equity | % |
| b. | If the firm converts to 20 percent debt, what will its cost of equity be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) |
| Cost of equity | % |
| c. | If the firm converts to 40 percent debt, what will its cost of equity be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) |
| Cost of equity | % |
| d-1 | If the firm converts to 20 percent debt, what will the company's WACC be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) |
| WACC | % |
| d-2 | If the firm converts to 40 percent debt, what will the company's WACC be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) |
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