What is its pretax cost of debt

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1. CCC Inc. has a target capital structure of 60 percent equity and 40 percent debt. The flotation costs for equity issues are 8 percent of the amount raised; the flotation costs for debt issues are 3 percent of the amount raised. If CCC needs $112 million for a new manufacturing facility, what is the true costs including flotation costs?

2. Tiger Inc. has a target debt-equity ratio of 0.63. Its WACC is 11.2 percent, and the tax rate is 21 percent. If Tiger's cost of equity is 14.5 percent, what is its pretax cost of debt?

Reference no: EM132010335

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