W.V. Trees has a debt-equity ratio of .64, a WACC of 10.8 percent, a pretax cost of debt of 7.9 percent, and a tax rate of 24 percent. What is the unlevered cost of equity capital?

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The unlevered cost of equity capital is 11.92 percent. This can be calculated using the following formula:Unlevered cost of equity capital = WACC + (WACC - Pretax cost of debt) * (1 - Tax rate) * (Debt-equity ratio)= 10.8% + (10.8% - 7.9%) * (1 - 24%) * (0.64)= 10.8% + 2.9% * 0.76 * 0.64= 10.8% + 1.44%= 11.92%

WV Trees Has a Debt-Equity Ratio of