Firms weighted average cost of capital

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Reference no: EM13914550

Williamson, Inc., has a debt–equity ratio of 2.5. The firm’s weighted average cost of capital is 10 percent, and its pretax cost of debt is 6 percent. Williamson is subject to a corporate tax rate of 35 percent. What is the unlevered cost of equity with taxes? I know that RS = R0 + (B / S)(R0 − RB)(1 − tC) and that gives me .2525 = R0 + (2.5)(R0 − .06)(1 − .35), but I can't remember the steps to find R0. Can you show me the steps please?

Reference no: EM13914550

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