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PLEASE SHOW WORKING AND FORMULA STEP BY STEP. DO NOT USE EXCEL Blitz Industries has a debt-equity...

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Finance

PLEASE SHOW WORKING AND FORMULA STEP BY STEP. DO NOT USEEXCEL

Blitz Industries has a debt-equity ratio of .6. Its WACC is 9.2percent, and its cost of debt is 6.5 percent. The corporate taxrate is 23 percent.

  

a.

What is the company’s cost of equity capital?

b.

What is the company’s unlevered cost of equity capital?

c-1.

What would the cost of equity be if the debt-equity ratio were2?

c-2.

What would the cost of equity be if the debt-equity ratio were1.0? (

c-3.

What would the cost of equity be if the debt-equity ratio werezero?

Answer & Explanation Solved by verified expert
4.2 Ratings (476 Votes)
DA DED DA 06106 0375 EA 1DA 10375 0625 a WACC Levered cost of equityEACost of debt1tax rateDA 0092 Levered cost of equity0625006510230375 Levered cost of equity 1172 b    See Answer
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PLEASE SHOW WORKING AND FORMULA STEP BY STEP. DO NOT USEEXCELBlitz Industries has a debt-equity ratio of .6. Its WACC is 9.2percent, and its cost of debt is 6.5 percent. The corporate taxrate is 23 percent.  a.What is the company’s cost of equity capital?b.What is the company’s unlevered cost of equity capital?c-1.What would the cost of equity be if the debt-equity ratio were2?c-2.What would the cost of equity be if the debt-equity ratio were1.0? (c-3.What would the cost of equity be if the debt-equity ratio werezero?

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