What is its pretax cost of debt

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Blue Bull, Inc., has a target debt-equity ratio of .85. Its WACC is 8.4 percent, and the tax rate is 35 percent. Required: (a) If the company’s cost of equity is 12.5 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 after tax cost of debt is 5.1 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: EM13928585

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