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Clifford, Inc., has a target debtequity ratio of .72. Its WACC is 8.6 percent, and the tax rate is 30 percent. a. If the companys

Clifford, Inc., has a target debtequity ratio of .72. Its WACC is 8.6 percent, and the tax rate is 30 percent.

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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