Plz Use excel !!! and show formula 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 40 percent debt with a cost of 6%, what will its cost of equity be? And the WACC? c. If the firm converts to 60 percent debt with a cost of 6% , 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.
Plz Use excel !!! and show formula 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 40 percent debt with a cost of 6%, what will its cost of equity be? And the WACC? c. If the firm converts to 60 percent debt with a cost of 6% , 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.
Chapter14: Security Structures And Determining Enterprise Values
Section: Chapter Questions
Problem 10EP
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Plz Use excel !!! and show formula
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
b. If the firm converts to 40 percent debt with a cost of 6%, what will its cost of equity be? And the WACC?
c. If the firm converts to 60 percent debt with a cost of 6% , 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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