The cost of equity be if the debt-equity ratio were zero

Assignment Help Financial Management

Reference no: EM131049072

Crosby Industries has a debt-equity ratio of 1.2. Its WACC is 13 percent, and its cost of debt is 4 percent. There is no corporate tax.

Requirement 1: What is Crosby’s cost of equity capital? (Do not round intermediate calculations. Input your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Cost of equity

Requirement 2:

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

Cost of equity %

(b) What would the cost of equity be if the debt-equity ratio were 0.5? (Do not round intermediate calculations. Input your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Cost of equity %

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

Cost of equity %

Reference no: EM131049072

Questions Cloud

What is price per share of equity under plan : Cooke Co. is comparing two different capital structures. Plan I would result in 9,000 shares of stock and $430,000 in debt. Plan II would result in 12,600 shares of stock and $275,200 in debt. What is the price per share of equity under Plan I? What ..

Refinancing the outstanding mortgage balance at lower rate : Assume a 25-year, $490,000 mortgage with a rate of 7.2 percent. 9 years into the mortgage, rates have fallen to 6.2 percent. What would be the monthly saving to a homeowner from refinancing the outstanding mortgage balance at the lower rate?

Explain how a butterfly spread can be created : Three call options on a stock have the same expiration date and strike prices of $55, $60, and $65. The market prices are $3, $5, and $8, respectively. Explain how a butterfly spread can be created. Construct a table showing the payoffs from the stra..

Essay - tourism in pacific asia : Essay - Tourism in Pacific Asia. Critically discuss the following statement: "The positive economic, sociocultural and/or environmental benefits that tourism can achieve for the host community far outweigh any negative impacts brought about by to..

The cost of equity be if the debt-equity ratio were zero : Crosby Industries has a debt-equity ratio of 1.2. Its WACC is 13 percent, and its cost of debt is 4 percent. There is no corporate tax. What is Crosby’s cost of equity capital? What would the cost of equity be if the debt-equity ratio were 2? What wo..

How much is he allowed to contribute to the plan for debra : Anthony, a self-employed plumber, makes a maximum contribution to a SEP for his employee, Debra. Debra's compensation is $40,000 for the year. How much is he allowed to contribute to the plan for Debra?

Analysis of integrated marketing campaign in global context : Task: The purpose of this assignment is to provide an opportunity to utilise your knowledge of international marketing to undertake an analysis of the integrated marketing campaign in the global context

Monetary policy debates : Monetary Transmission Mechanism: According to the Keynesian school, show what happens, step by step, when the Federal Reserve sells US treasury bills to US banks.

What is the average amount of receivables-sales outstanding : Receivables Investment Snider Industries sells on terms of 3/10, net 30. Total sales for the year are $1,936,000. Thirty percent of the customers pay on the 10th day and take discounts; the other 70% pay, on average, 28 days after their purchases. Wh..

User Account

All Pages