Williamson, Inc., has a debt−equity ratio of 2.40. The company'sweighted average cost of capital is...

Williamson, Inc., has a debt−equity ratio of 2.40. The company's weighted average cost of capital is 11 percent, and its pretax cost of debt is 5 percent. The corporate tax rate is 30 percent.

a. What is the company's cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Cost of equity capital

b. What is the company's unlevered cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Unlevered cost of equity

c. What would the weighted average cost of capital be if the company's debt−equity ratio were .80 and 1.95? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

	Weighted average cost of capital
Debt–equity ratio .80
Debt–equity ratio 1.95

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Williamson, Inc., has a debt–equity ratio of 2.43. The company's weighted average cost of capital is...

Williamson, Inc., has a debt–equity ratio of 2.43. The company's weighted average cost of capital is 11 percent, and its pretax cost of debt is 5 percent. The corporate tax rate is 30 percent. What would the company’s weighted average cost of capital be if the company's debt–equity ratio were .65 and 1.80? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Williamson, Inc., has a debt–equity ratio of 2.54. The company's weighted average cost of capital is...

Williamson, Inc., has a debt–equity ratio of 2.54. The company's weighted average cost of capital is 9 percent, and its pretax cost of debt is 7 percent. The corporate tax rate is 40 percent. a. What is the company’s cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity capital % b. What is the company’s unlevered cost of equity capital?...

Dickson, Inc., has a debt-equity ratio of 2.75. The firm’s weighted average cost of capital is...

Dickson, Inc., has a debt-equity ratio of 2.75. The firm’s weighted average cost of capital is 12 percent and its pretax cost of debt is 8 percent. The tax rate is 22 percent. a. What is the company’s cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company’s unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer...

Dickson, Inc., has a debt-equity ratio of 2.05. The firm’s weighted average cost of capital is...

Dickson, Inc., has a debt-equity ratio of 2.05. The firm’s weighted average cost of capital is 11 percent and its pretax cost of debt is 8 percent. The tax rate is 23 percent. a. What is the company’s cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company’s unlevered cost of equity capital? (Do not round intermediate calculations and enter your...

Dickson, Inc., has a debt-equity ratio of 2.5. The firm’s weighted average cost of capital is...

Dickson, Inc., has a debt-equity ratio of 2.5. The firm’s weighted average cost of capital is 11 percent and its pretax cost of debt is 9 percent. The tax rate is 22 percent. a. What is the company’s cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company’s unlevered cost of equity capital? (Do not round intermediate calculations and enter your...

Dickson, Inc., has a debt-equity ratio of 2.7. The firm’s weighted average cost of capital is...

Dickson, Inc., has a debt-equity ratio of 2.7. The firm’s weighted average cost of capital is 11 percent and its pretax cost of debt is 7 percent. The tax rate is 21 percent. a. What is the company’s cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company’s unlevered cost of equity capital? (Do not round intermediate calculations and enter your...

Dickson, Inc., has a debt-equity ratio of 2.55. The firm’s weighted average cost of capital is...

Dickson, Inc., has a debt-equity ratio of 2.55. The firm’s weighted average cost of capital is 12 percent and its pretax cost of debt is 10 percent. The tax rate is 23 percent. a. What is the company’s cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company’s unlevered cost of equity capital? (Do not round intermediate calculations and enter your...

Restex has a debt-equity ratio of 0.76, an equity cost of capital of 18 %, and a debt cost of capital of 9 %.

Restex has a debt-equity ratio of 0.76, an equity cost of capital of 18 %, and a debt cost of capital of 9 %. Restex's corporate tax rate is 30%, and its market capitalization is $ 199 million. a. If? Restex's free cash flow is expected to be $5 million one year from now and will grow at a constant? rate, what expected future growth rate is consistent with?Restex's current market? value? b. Estimate the value of Restex's interest tax...

Safeassign Corp. has a debt to equity ratio of .85. Its Weighted average cost of capital...

Safeassign Corp. has a debt to equity ratio of .85. Its Weighted average cost of capital is 9.9% and the tax rate is 35%. If Safeassign’s after-tax cost of debt is 6.8%, what is the cost of equity? ii. Safeassign Corp. has a debt to equity ratio of .85. Its Weighted average cost of capital is 9.9% and the tax rate is 35%. If Safeassign’s cost of equity is 14% what is the pre-tax cost of debt? iii. Safegaurd Inc....

Roston Corporation has a debt-equity ratio of 3. The company’s weighted average cost of capital (WACC)...

Roston Corporation has a debt-equity ratio of 3. The company’s weighted average cost of capital (WACC) is 11%. Its before-tax cost of debt is 13% and tax rate is 25%. The company uses Capital Asset Pricing Model (CAPM) to calculate its cost of equity. The risk-free rate of return is 5% and the market risk premium is 7%. Find out the beta of the company.

Subjects