Estimate the old cost of equity capital

Reference no: EM133264443

The risk-free rate is 4% and the market risk premium is 8%. NULU Corporation used to operate its business in unlevered form and had an equity Beta estimated at 1. The firm will move to a new capital structure featuring a debt-to-assets ratio of 50%, with a debt beta of zero and cost of debt capital of 4%. Assuming the tax rate is zero estimate: the old cost of equity capital, old WACC, new cost of equity capital, and the new WACC.

Reference no: EM133264443

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