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Jungle, Inc., has a target debtequity ratio of 0.87. Its WACC is 12 percent, and the tax rate is 35 percent. Required: (a) If Jungle's
Jungle, Inc., has a target debtequity ratio of 0.87. Its WACC is 12 percent, and the tax rate is 35 percent. Required: (a) If Jungle's cost of equity is 17 percent, what is the pretax cost of debt? (Do not round your intermediate calculations.) If Jungle's cost of equity is 17 percent, what is the pretax cost of debt? (Do not round your intermediate calculations.) (b) If instead you know that the aftertax cost of debt is 6.2 percent, what is the cost of equity? (Do not round your intermediate calculations.)
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