## Question

###### Weston Industries has a debt-equity ratio of 1.3. Its WACC is 7.5 percent, and its cost...

Weston Industries has a debt-equity ratio of 1.3. Its WACC is 7.5 percent, and its cost of debt is 5.2 percent. The corporate tax rate is 23 percent. |

a. | What is the company’s cost of equity capital? |

b. | What is the company’s unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |

c-1. | What would the cost of equity be if the debt-equity ratio were 2? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |

c-2. | What would the cost of equity be if the debt-equity ratio were 1.0? |

c-3. | What would the cost of equity be if the debt-equity ratio were zero? |

## Answers

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