Target debt-equity ratio-what is the cost of equity

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Reference no: EM131185688

Jungle, Inc., has a target debt—equity ratio of 0.8. Its WACC is 10.5 percent, and the tax rate is 35 percent.

Required: (a) If Jungle's cost of equity is 15.5 percent, what is the pretax cost of debt? (Do not round your intermediate calculations.)

(b) If instead you know that the aftertax cost of debt is 6 percent, what is the cost of equity? (Do not round your intermediate calculations.)

Reference no: EM131185688

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