Business, 30.11.2020 17:40 dbanks701

Horford Co. has no debt. Its cost of capital is 8.9 percent. Suppose the company converts to a debt-equity ratio of 1.0. The interest rate on the debt is 5.7 percent. Ignore

taxes for this problem.

a. What is the company's new cost of equity? (Do not round intermediate calculations

and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

b. What is its new WACC? (Do not round intermediate calculations and enter your

answer as a percent rounded to 2 decimal places, e. g., 32.16.)

Answers: 2

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Horford Co. has no debt. Its cost of capital is 8.9 percent. Suppose the company converts to a debt...