1. If a firm’s debt-equity ratio is 25% what is its debt ratio?
2. The beta of a stock is 1.2. The risk-free rate is 4% and the market risk premium is 5%. What is the cost of equity?
3. The cost of equity is 12%. The cost of debt is 5%. The tax rate is 20%. The target debt ratio is 25%. What is the WACC? Debt ratio = Debt/(Debt + Equity).