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Category > Accounting Posted 26 Apr 2017 My Price 7.00

Twice Shy Industries has a debtAc

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.

  

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.)

  

  Cost of equity capital %  
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.)

  Unlevered cost of equity capital %  
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.)

  Cost of equity %  
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.)

  

  Cost of equity %  

  

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.)

  

 

  Cost of equity %  

Answers

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Status NEW Posted 26 Apr 2017 08:04 AM My Price 7.00

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-----------  -----------  ----------- ----------- -----------

Attachments

file 1493193852-1516335_1_636286935996325631_WACC.xlsx preview (22 words )
Gi-----------ven-----------:D/-----------EWA-----------CCC-----------ost----------- of----------- de-----------bt -----------(Kd-----------)Ta-----------x r-----------ate----------- 1+-----------D/E-----------Wei-----------ght----------- of----------- Eq-----------uit-----------y (-----------E/(-----------D+E-----------))W-----------eig-----------ht -----------of -----------Deb-----------tWA-----------CC -----------= W-----------d*K-----------d*(-----------1-t-----------ax -----------rat-----------e)+-----------We*-----------KeT-----------o f-----------ind-----------: K-----------eWd-----------*Kd-----------*(1------------ta-----------x r-----------ate-----------)Ke-----------a.b-----------.c.-----------d.W-----------ACC----------- = -----------Ku*-----------(1------------(ta-----------x r-----------ate-----------*Wd-----------))T-----------o f-----------ind-----------: K-----------uKu----------- -----------
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