question archive A company currently has a WACC of 10
A company currently has a WACC of 10
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A company currently has a WACC of 10.6 percent and no debt. The tax rate is 21 percent. a. What is the company's current cost of equity? b. If the firm converts to 20 percent debt with interest rate 5%, what will its cost of equity be? And the WACC? C. If the firm converts to 80 percent debt with interest rate 5%, what will its cost of equity be? And the WACC? d. What can you conclude from the values of the cost of equity and WACC obtained in b. and c.?
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