Gulf coast tours currently has a weighted average cost of capital of 12.4 percent based on a combination of debt and equity financing. the firm has no preferred stock. the current debt-equity ratio is .47 and the aftertax cost of debt is 6.1 percent. the company just hired a new president who is considering eliminating all debt financing. all else constant, what will the firm's cost of capital be if the firm switches to an all-equity firm

Anew firm is developing its business plan. it will require $615,000 of assets, and it projects $450,000 of sales and $355,000 of operating costs for the first year. management is reasonably sure of these numbers because of contracts with its customers and suppliers. it can borrow at a rate of 7.5%, but the bank requires it to have a tie of at least 4.0, and if the tie falls below this level the bank will call in the loan and the firm will go bankrupt. what is the maximum debt ratio the firm can use? (hint: find the maximum dollars of interest, then the debt that produces that interest, and then the related debt ratio.)a. 41.94%b. 44.15%c. 46.47%d. 48.92%e. 51.49%