If it were unlevered, the overall firm beta for Wild Widgets Inc. (WWI) would be 1.5. WWI has a target debt/equity ratio of 0.2. The expected return on the market is 0.15, and Treasury bills are currently selling to yield 0.03. WWI one-year bonds (with a face value of $1,000) carry an annual coupon of 5% and are selling for $960.32. The corporate tax rate is 38%.(Round your answers to 2 decimal places before the percentage sign. (e.g., 10.23%)) a.WWI’s before-tax cost of debt is _____%.b.WWI’s cost of equity is _____%.c.WWI’s weighted average cost of capital is _____%.
This question was answered on: May 23, 2022
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