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Target debt-equity ratio

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Pagent Inc has a target debt-equity ratio of 1.25. Its WACC is 9.2 percent, and the tax rate is 35 percent.

a. If Jungle's cost of equity is 14 percent, what is its pretax cost of debt?

b. If instead you know that the after-tax cost of debt is 6.8 percent, what is the cost of equity?

Reference no: EM131411550

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