Question: Lunar Corp has a debt - to - equity ratio of 1 . 2 5 . Its WACC is 7 . 8 % , and

Lunar Corp has a debt-to-equity ratio of 1.25. Its WACC is 7.8%, and its cost of debt is 4.7%. The corporate tax rate is 21%.
a. What is the companys cost of equity capital?
b. What is the companys unlevered cost of equity capital?
c. What would be the cost of equity if the D/E ratio were 2? What if it were 1?

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