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Question 3 alladium Ltd. has a target debt-equity ratio of 0.76. Its WACC is 7.8%, and the tax rate is 22%. a) If Palladium
Question 3 "alladium Ltd. has a target debt-equity ratio of 0.76. Its WACC is 7.8%, and the tax rate is 22%. a) If Palladium Ltd.'s cost of equity is 10%, what is its pre-tax cost of debt? (6 points) b) If instead, you know that the after-tax cost of debt is 5.6%, what is the cost of equity? (3 points) c) The Bank of Canada is expecting to increase interest rates this year. Will this have any impact on the cost of equity capita Explain your answer as it relates to the overall cost of capital (3 points)
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