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Levels Tought:
University
| Teaching Since: | Apr 2017 |
| Last Sign in: | 438 Weeks Ago, 2 Days Ago |
| Questions Answered: | 9562 |
| Tutorials Posted: | 9559 |
bachelor in business administration
Polytechnic State University Sanluis
Jan-2006 - Nov-2010
CPA
Polytechnic State University
Jan-2012 - Nov-2016
Professor
Harvard Square Academy (HS2)
Mar-2012 - Present
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Twice Shy Industries has a debtAcˆ’equity ratio of 1.8. Its WACC is 8.3 percent, and its cost of debt is 6.3 percent. The corporate tax rate is 35 percent. |
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| a. |
What is the companyAc€?cs cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
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| Â Â Cost of equity capital | %Â Â |
| b. |
What is the companyAc€?cs unlevered cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Â Â Unlevered cost of equity capital | %Â Â |
| c-1 |
What would the cost of equity be if the debtAcˆ’equity ratio were 2? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Â Â Cost of equity | %Â Â |
| c-2 |
What would the cost of equity be if the debtAcˆ’equity ratio were 1.0? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
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| Â Â Cost of equity | %Â Â |
 Â
| c-3 |
What would the cost of equity be if the debtAcˆ’equity ratio were zero? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
 Â
Â
| Â Â Cost of equity | %Â Â |
a-----------. 1-----------5.8-----------7% -----------b. -----------10.-----------71%----------- c.----------- 16-----------.71-----------% d-----------. 1-----------2.5-----------1% -----------e. -----------Whe-----------n, -----------D/E----------- = -----------0, -----------the-----------n C-----------ost----------- of----------- eq-----------uit-----------y w-----------oul-----------d b-----------e s-----------ame----------- as----------- th-----------e W-----------ACC----------- Â----------- -----------Â ----------- -----------Â -----------