Question
Blue Bull, Inc., has a target debt-equity ratio of .72. Its WACC is 8.6 percent, and the tax rate is 30 percent. Required: (a) If
Blue Bull, Inc., has a target debt-equity ratio of .72. Its WACC is 8.6 percent, and the tax rate is 30 percent. Required: (a) If the companys cost of equity is 11.2 percent, what is its pretax cost of debt? (b) If the aftertax cost of debt is 5.4 percent, what is the cost of equity?
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Focus On Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes
2nd Edition
0073530638, 9780073530635
