Cost of equity capital-debt-equity ration, Finance Basics

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Cost of equity capital-debt-equity ration

Crosby Industries has a debt-equity ration of 1.3. Its WACC is 15% and its cost of debt is 8%. There is no corporate tax.

Requirement 1

What is Crosby's cost of equity capital?

Requirement 2

(a) What would the cost of equity be if the debt-equity ration were 2.0?

(b) What would the cost of equity be if the debt-equity ratio were .7?

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Finance Basics: Cost of equity capital-debt-equity ration

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Finance Basics: Cost of equity capital-debt-equity ration

Reference No:- TGS044701

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