Assume the M&M world with perfect capital markets. A firm has a market value of equity of $40,000. It borrows $8000 at 7%.
If the unlevered cost of equity is 16%, what is the firm’s cost of equity capital?
A.8.9%
B.21.4%
C.17.8%
D.24.9%
What is this firm’s (pretax) WACC (RA)?
A.16%
B.17.8%
C.7%
D.15%