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Business, 08.04.2020 00:04 ericasolis2586

Dickson, Inc., has a debt-equity ratio of 2.5. The firm’s weighted average cost of capital is 11 percent and its pretax cost of debt is 9 percent. The tax rate is 22 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.)
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.)
c.
What would the company’s weighted average cost of capital be if the company's debt-equity ratio were .60 and 1.50? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e. g., 32.16.)

a. Cost of equity %
b. Unlevered cost of equity %
c. WACC if debt-equity ratio = 0.60 %
WACC if debt-equity ratio = 1.50 %

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Dickson, Inc., has a debt-equity ratio of 2.5. The firm’s weighted average cost of capital is 11 per...

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