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Blue Bull, Inc., has a target debt-equity ratio of .76. Its WACC is 8.5 percent, and the tax rate is 34 percent. Required: (a) If
Blue Bull, Inc., has a target debt-equity ratio of .76. Its WACC is 8.5 percent, and the tax rate is 34 percent.
Required: | |
(a) | If the companys cost of equity is 11.6 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).) |
Pretax cost of debt | % |
(b) | If the aftertax cost of debt is 5.8 percent, what is the cost of equity? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
Cost of equity | % |
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