Weston Industries has a debt-equity ratio of 1.5. Its WACC is 9.2 percent, and its cost of debt is 6%. The Corporate tax rate is 35%.
a. What is Weston’s cost of equity capital?
b. What is Weston’s unlevered cost of equity capital?
c-1. What would the cost of equity be if the deb-equity were 2?
c-2. What would the cost of equity be if the debt-equity ratio were 1?
c-3. What would the cost of equity be if the debt-equity ratio were 0?