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I am having trouble computing the cost of equity. I only need part B answered. Question is in attachment. Question 11 Blue Bull, Inc., has
I am having trouble computing the cost of equity. I only need part B answered. Question is in attachment.
Question 11 Blue Bull, Inc., has a target debt-equity ratio of .89. Its WACC is 8.8 percent, and the tax rate is 40 percent. Required: (a) If the company's cost of equity is 12.9 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 6.99 % (b) If the aftertax cost of debt is 5.5 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 11.37 %Step by Step Solution
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