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Posted on Sep 09, 2024

Zeta Ltd. has a debt-to-equity ratio of 0.35. The company has a WACC of 12% and is subject to a corporate tax rate of 30%.

Suppose Zetas cost of equity is 14%, what is its pre-tax cost of debt? (5 marks)

What is its cost of equity if its after-tax cost of debt is 5.5%? (5 marks)

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