Kose SA has a target debtequity ratio of 0.80. Its WACC is 10.5 per cent, and the
Question:
Kose SA has a target debt–equity ratio of 0.80. Its WACC is 10.5 per cent, and the tax rate is 35 per cent.
(a) If Kose’s cost of equity is 15 per cent, what is its pre-tax cost of debt?
(b) If instead you know that the after-tax cost of debt is 6.4 per cent, what is the cost of equity?
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Step by Step Answer:
a To find the pretax cost of debt we can use the following equation PreTax C...View the full answer
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Related Book For 
Corporate Finance
ISBN: 9780077173630
3rd Edition
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe
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