Problemblue bull inc has a target debt-equity ratio of 78, Ask an Expert

Finance

Problem:

Blue Bull, Inc., has a target debt-equity ratio of .78. Its WACC is 8.7 percent, and the tax rate is 38 percent

Requirement:

a. If the company's cost of equity is 11.8 percent, what is its pretax cost of debt?

b. If the aftertax cost of debt is 6 percent, what is the cost of equity?

Note: Please provide reasons to support your answer.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91148291

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