Shadow corp has no debt but can borrow at 80 percent the


Shadow Corp. has no debt but can borrow at 8.0 percent. The firm’s WACC is currently 9.8 percent, and the tax rate is 35 percent.

What is Shadow’s cost of equity?

If the firm converts to 15 percent debt, what will its cost of equity be?

If the firm converts to 50 percent debt, what will its cost of equity be?

If the firm converts to 15 percent debt, what will the company's WACC be?

If the firm converts to 50 percent debt, what will the company's WACC be?

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Financial Management: Shadow corp has no debt but can borrow at 80 percent the
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