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Blue Bull, Inc., has a target debt-equity ratio of .87. 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 .87. Its WACC is 8.6 percent, and the tax rate is 30 percent. |
| Required: | |
| (a) | If the companys cost of equity is 12.7 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 5.3 percent, what is the cost of equity? |
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