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What is its pretax cost of debt-cost of equity
Course:- Financial Management
Reference No.:- EM13942952




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Blue Bull, Inc., has a target debt-equity ratio of .73. Its WACC is 8.7 percent, and the tax rate is 38 percent

Required:

(a) If the company’s cost of equity is 11.3 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).)

(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).)




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