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

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Blue Bull, Inc., has a target debt-equity ratio of .81. Its WACC is 8.5 percent, and the tax rate is 34 percent. Required: (a) If the company’s cost of equity is 12.1 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).) Pretax cost of debt % (b) If the aftertax cost of debt is 5.2 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).) Cost of equity %

Reference no: EM131065719

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