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Clifford, Inc., has a target debt-equity ratio of .85. Its WACC is 8.1 percent, and the tax rate is 35 percent. a. If the companys

Clifford, Inc., has a target debt-equity ratio of .85. Its WACC is 8.1 percent, and the tax rate is 35 percent.

a. If the companys cost of equity is 11 percent, what is its pretax cost of debt?

b. If the aftertax cost of debt is 3.8 percent, what is the cost of equity?

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