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What is? goodyear unlevered cost of? capital

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Reference no: EM132993117

Suppose Goodyear Tire and Rubber Company has an equity cost of capital of 8.4?%, a debt cost of capital of 6.9?%, a marginal corporate tax rate of 35?%, and a? debt-equity ratio of 2.9. Assume that Goodyear maintains a constant? debt-equity ratio.

Question a. What is? Goodyear's WACC?

Question b. What is? Goodyear's unlevered cost of? capital?

Question c.? Explain, intuitively, why? Goodyear's unlevered cost of capital is less than its equity cost of capital and higher than its WACC.

Reference no: EM132993117

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