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Home / Questions / Skillet Industries has a debtâequity ratio of 18 Its WACC is 91 percent and its cost of de...

Skillet Industries has a debtâequity ratio of 18 Its WACC is 91 percent and its cost of debt is 71 percent The corporate tax rate is 35 percent a What is the companyâs cost of equity

Skillet Industries has a debt–equity ratio of 1.8. Its WACC is 9.1 percent, and its cost of debt is 7.1 percent. The corporate tax rate is 35 percent.

a. What is the company’s cost of equity capital? (Round your answer to 2 decimal places. (e.g., 32.16))

Cost of equity capital_________ %

b. What is the company’s unlevered cost of equity capital? (Round your answer to 2 decimal places. (e.g., 32.16))

Unlevered cost of equity capital_________ %

c-1 What would the cost of equity be if the debt–equity ratio were 2? (Round your answer to 2 decimal places. (e.g., 32.16))

Cost of equity_________ %

c-2 What would the cost of equity be if the debt–equity ratio were 1.0? (Round your answer to 2 decimal places. (e.g., 32.16))

Cost of equity_________ %

c-3 What would the cost of equity be if the debt–equity ratio were zero? (Round your answer to 2 decimal places. (e.g., 32.16))

Cost of equity_______ %

 

Sep 06 2020 View more View Less

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