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Williamson, Inc., has a debt–equity ratio of 2.51. The firm’s weighted average cost of capital is 9 percent, and its pretax cost of debt is 7 percent. Williamson is subject to a corporate tax rate of 40 percent.
a. What is Williamson’s cost of equity capital? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Cost of equity capital %
b. What is Williamson’s unlevered cost of equity capital? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Unlevered cost of equity %
c. What would Williamson’s weighted average cost of capital be if the firm’s debt–equity ratio were .70 and 1.55? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
Weighted average cost of capital
Debt–equity ratio %
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YOU are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows: Revenues (10,000 visits): $400,000; Wages and benefits: $220,000; Rent: $5,000; Construct the clinic's projected P&L statement...
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