Which leverage ratio is better

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Eccles Company has beta 1.7, debt/assets ratio 20%, and tax rate 34%. The cost of debt for Eccles is 9%, and of equity 15%. The riskless rate is 4%. Find the WACC of Eccles. If its debt/assets ratio is increased to 25% while its cost of debt remains unchanged, what is the new WACC? Which leverage ratio is better?

Reference no: EM13939327

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