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Blue Bull, Inc. has a target debt-equity ratio of .75. Its WACC is 8.4 percent, and the tax rate is 35 percent. Required: (a) If
Blue Bull, Inc. has a target debt-equity ratio of .75. Its WACC is 8.4 percent, and the tax rate is 35 percent.
Required:
(a) If the companys cost of equity is 11.5 percent, what is its pretax cost of debt?(Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16)
(b) If the aftertax cost of debt is 5.7 percent, what is the cost of equity?
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