Johnnys liquor has a debt to equity ratio of 10 wacc of 14, Ask an Expert

Finance

Johnny's Liquor has a debt to equity ratio of 1.0, WACC of 14%, and a pretax cost of debt of 6%. Its tax rate is 40%

a. What is Johnny's Liquor's cost of equity?

b. What is the company's unlevered cost of equity?

c. What would be the cost of equity if the debt to equity ratio was 2.0?

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