Question
Welling Inc. has a target debt-equity ratio of 0.85. Its WACC is 9.1%, and the tax rate is 35%. If the company's cost of equity
Welling Inc. has a target debt-equity ratio of 0.85. Its WACC is 9.1%, and the tax rate is 35%.
If the company's cost of equity is 14%, what is its pre-tax cost of debt?(Do not round intermediate calculations. Round the final answer to 2 decimal places.)
If instead you know that the after-tax cost of debt is 6.8%, what is the cost of equity?(Do not round intermediate calculations. Round the final answer to 2 decimal places.)
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Valuation Measuring and managing the values of companies
Authors: Mckinsey, Tim Koller, Marc Goedhart, David Wessel
5th edition
978-0470424650, 9780470889930, 470424656, 470889934, 978-047042470
