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Malkin corp has no debt but can borrow at 575 percent the

Malkin Corp. has no debt but can borrow at 5.75 percent. The firm's WACC is currently 10 percent, and there is no corporate tax.

a. What is the company's cost of equity?

b. If the firm converts to 20 percent debt, what will its cost of equity be?

c. If the firm converts to 60 percent debt, what will its cost of equity be?

d. What is the company's WACC in parts (b) and (c)?

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Finance Basics: Malkin corp has no debt but can borrow at 575 percent the

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