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Pincrof Corporation has a current WACC of 6% at its target debt/assets ratio of 40%...

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Accounting

Pincrof Corporation has a current WACC of 6% at its target debt/assets ratio of 40% which is continuously adjusted. Pincrof plans to increase its target debt/assets ratio to 70% which would increase the cost of debt by 200 basis points (=+2%) p.a. to 4% p.a. We know that the corporate tax rate is 20%, the estimated market risk premium 5% and the risk-free rate 1% p.a. Pincrof's unlevered equity beta is

a. 1,032 b. 0,688 c. 0,752 d. 0,924

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