Williamson, Inc., has a debt–equity ratio of 2.6. The company's weighted average cost of capital is 9 percent, and its pretax cost of debt is 7 percent. The corporate tax rate is 40 percent.
a. What is the company’s cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Cost of equity capital %
b. What is the company’s unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Unlevered cost of equity %
c. What would the company’s weighted average cost of capital be if the company's debt–equity ratio were .80 and 1.80? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Weighted average cost of capital
Debt–equity ratio = .80 % =
Debt–equity ratio = 1.80 % =