Portneuf Industries has a debt-equity ratio of 1.5. Its WACC is 8.4%, and its cost of debt is 5.9%. The corporate tax rate is 35%. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.) a. What is the company's cost of equity capital? Cost of equity capital % b. What is the company's unlevered cost of equity capital? Unlevered cost of equity capital c-1. What would the cost of equity be if the debt-equity ratio were 2? Cost of equity % c-2. What would the cost of equity be if the debt-equity ratio were 1.0? Cost of equity % c-3. What would the cost of equity be if the debt-equity ratio were zero? Cost of equity %
Portneuf Industries has a debt-equity ratio of 1.5. Its WACC is 8.4%, and its cost of debt is 5.9%. The corporate tax rate is 35%. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.) a. What is the company's cost of equity capital? Cost of equity capital % b. What is the company's unlevered cost of equity capital? Unlevered cost of equity capital c-1. What would the cost of equity be if the debt-equity ratio were 2? Cost of equity % c-2. What would the cost of equity be if the debt-equity ratio were 1.0? Cost of equity % c-3. What would the cost of equity be if the debt-equity ratio were zero? Cost of equity %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Portneuf Industries has a debt-equity ratio of 1.5. Its WACC is 8.4%, and its cost of debt is 5.9%. The corporate tax rate is
35%. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.)
a. What is the company's cost of equity capital?
Cost of equity capital
%
b. What is the company's unlevered cost of equity capital?
Unlevered cost of equity capital
c-1. What would the cost of equity be if the debt-equity ratio were 2?
Cost of equity
c-2. What would the cost of equity be if the debt-equity ratio were 1.0?
Cost of equity
c-3. What would the cost of equity be if the debt-equity ratio were zero?
Cost of equity
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