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Irving Corp. has no debt but can borrow at 6.4 percent. The firm's WACC is currently...

Question:

Irving Corp. has no debt but can borrow at 6.4 percent. The firms WACC is currently 10.9 percent, and there is no corporate

Irving Corp. has no debt but can borrow at 6.4 percent. The firm's WACC is currently 10.9 percent, and there is no corporate tax. a. What is the company's cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the firm converts to 30 percent debt, what will its cost of equity be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. If the firm converts to 60 percent debt, what will its cost of equity be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) d. What is the company's WACC in parts band c? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a. Cost of equity b. Cost of equity Cost of equity d. WACC with 30 percent debt WACC with 60 percent debt

Answers

a) Cost of equity 10.90% b) Cost of equity 12.83% -10.9%+(10.9%-6.4%)*(0.3/0.7) c) Cost of equity 17.65% =10.9%+(10.9%-6.4%)*

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