Question
Blue Bull, Inc., has a target debt-equity ratio of .55. Its WACC is 8.1 percent, and the tax rate is 35 percent. If the company's
Blue Bull, Inc., has a target debt-equity ratio of .55. Its WACC is 8.1 percent, and the tax rate is 35 percent.
If the company's cost of equity is 11 percent, what is its pretax cost of debt?
If the aftertax cost of debt is 3.8 percent, what is the cost of equity?
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Financial Management for Public, Health and Not-for-Profit Organizations
Authors: Steven A. Finkler, Daniel L. Smith, Thad D. Calabrese, Robert M. Purtell
5th edition
1506326846, 9781506326863, 1506326862, 978-1506326849
