Riemanns currently has a weighted average cost of capital, Ask an Expert

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Riemann's currently has a weighted average cost of capital of 9.3 percent based on a combination of debt and equity financing. The firm has no preferred stock. The current debt-equity ratio is 0.66 and the aftertax cost of debt is 6.5 percent. The company just hired a new president who is considering eliminating all debt financing. All else constant, what will the firm's cost of capital (in percents) be if the firm switches to an all-equity firm?

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Financial Management, Finance

Category:- Financial Management
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