Unida Systems has 33 million shares outstanding trading for $11 per share
Unida Systems has 33 million shares outstanding trading for $11 per share.
In addition, Unida has $101 million in outstanding debt. Suppose Unida’s equity cost of capital is 13%, its debt cost of capital is 7%, and the corporate tax rate is 33%.
a. What is Unida’s unlevered cost of capital?
b. What is Unida’s after-tax debt cost of capital?
c. What is Unida’s weighted average cost of capital?