Shadow corp. has no debt but can borrow at 6.5%. The firm's WACC is currently 10.4% and the tax rate is 35%
a) What is Shadows cost of equity?
b) If the firm converts to 25% debt, what will its cost of equity be?
c) If the firm converts to 50% debt, what will its cost of equity be?
d) What is Shadow's WACC in part (b)? In part(c)?