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Crosby Industries has a debt–equity ratio of 1.2. Its WACC is 11 percent, and its cost of debt is 5 percent. There is no corporate tax.
a. What is the company’s cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent 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 2? (Do not round intermediate calculations and enter your answer as a percent rounded to the nearest whole number, e.g., 32.)
What would the cost of equity be if the debt–equity ratio were .7? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
What would the cost of equity be if the debt–equity ratio were zero? (Do not round intermediate calculations and enter your answer as a percent rounded to the nearest whole number, e.g., 32.)
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