Gamer co has no debt its cost of capital is 10 percent, Financial Accounting

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Gamer co has no debt its cost of capital is 10 percent

Gamer Co. has no debt. Its cost of capital is 10 percent. Suppose the company converts to a debt–equity ratio of 1. The interest rate on the debt is 7.1 percent. Ignore taxes for this problem.

1. What is the company’s new cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

2. What is its new WACC?

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Financial Accounting: Gamer co has no debt its cost of capital is 10 percent

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