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Kunitz Co. has no debt. Its cost of capital is 9.7 percent. Suppose Kunitz converts to a debt-equity ratio of 1. The interest rate on the debt is 6.8 percent. Ignore taxes for this problem.
Requirement 1:
What is the company’s new cost of equity? (Do not round intermediate calculations. Enter youd answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Cost of equity %
Requirement 2:
What is its new WACC? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
WACC %
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