Question: need help with A B c d please asap Retek, Inc. has an equity cost of capital of 11 8% and a debt cost of
Retek, Inc. has an equity cost of capital of 11 8% and a debt cost of capital of 6 3% Retek maintains a constant debt-equity ratio of 0 5 and is tax rate is 33% a. What is Revtek's s WACC given its current debt-equity ratio? no personal taxes, how will Revtek's WACC change if it increases its debt-equity ratio to 2 0 and its debt cost of capital remains at 6 3%? c. Now suppose investors pay tax rates of 33% on interest income and 13% on income from equity How wil Reviek's WACC change ifit n reases its debt equity ratio to 2.0 in this case? d. Provide an intuitive explanation for the difference in your answers to parts (b) and (c) a. What is Revtek's WACC given its current debt-equity ratio? Retek's WACC given its current deb-equity ratio is % (Round to one decimal place )
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
