Company cost of equity-layers inc

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Layers Inc. currently has no debt. If they choose to borrow, they can do so at a rate of 6.4%. The firm's WACC is currently 9.5% and the tax rate is 35%. There are no costs of financial distress.

a) What is the company's cost of equity?

b) If the firm converts to =35% debt, what will its' cost of equity be?

c) If the firm converts to 50% debt, what will its' cost of equity be?

d) What is the company's WACC in part (c)?

Reference no: EM132711572

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