If it were unlevered, the overall firm beta for Wild Widgets Inc. (WWI) would be 1.5....

If it were unlevered, the overall firm beta for Wild Widgets Inc. (WWI) would be 1.5. WWI has a target debt/equity ratio of 0.2. The expected return on the market is 0.17, and Treasury bills are currently selling to yield 0.07. WWI one-year bonds (with a face value of $1,000) carry an annual coupon of 11% and are selling for $985.84. The corporate tax rate is 40%.(Round your answers to 2 decimal places before the percentage sign. (e.g., 10.23%))

a.	WWI’s before-tax cost of debt is %.
b.	WWI’s cost of equity is %.
c.	WWI’s weighted average cost of capital is

Expert Solution

jeff jeffy answered 1 year ago

If it were unlevered, the overall firm beta for Wild Widgets Inc. (WWI) would be 1.7....

If it were unlevered, the overall firm beta for Wild Widgets Inc. (WWI) would be 1.7. WWI has a target debt/equity ratio of 1. The expected return on the market is 0.08, and Treasury bills are currently selling to yield 0.06. WWI one-year bonds (with a face value of $1,000) carry an annual coupon of 2% and are selling for $925.52. The corporate tax rate is 35%.(Round your answers to 2 decimal places before the percentage sign. (e.g., 10.23%)) a....

WACC Comparables - 2 If it were unlevered, the overall firm beta for Wild Widgets Inc....

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