What is its pretax cost of debt and cost of equity

Assignment Help Financial Management

Reference no: EM131890942

Kose, Inc., has a target debt-equity ratio of 1.35. Its WACC is 8.3 percent, and the tax rate is 35 percent.

a. If Kose’s cost of equity is 14 percent, what is its pretax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

b. If instead you know that the aftertax cost of debt is 3.8 percent, what is the cost of equity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

Reference no: EM131890942

Questions Cloud

What are stock dividends and stock splits : What are stock dividends and stock splits? What are the advantages and disadvantages of stock dividends and stock splits?

How are changes in the price level measured : How are changes in the price level measured? How much have prices increased in recent years? What is the difference between real and nominal GDP?

What is the effective annual cost of trade credit : Pets Store Inc. sells on terms of 1/20, net 50. What is the effective annual cost of trade credit under these terms? Use a 365-day year.

What is the impllcit cost of trade credit under the terms : Book Depot inc sells on terms of 2/15, net 65. What is the impllcit cost of trade credit under the terms? Use a 365-day year.

What is its pretax cost of debt and cost of equity : If Kose’s cost of equity is 14 percent, what is its pretax cost of debt? what is the cost of equity?

Determine which of the organizations is the most helpful : Determine the key actions that you would take in order to ensure that Web applications are compliant with the applicable security standards.

What is the cost of greshak external equity : If flotation cost are 15.0 percent of the issues gross proceeds, what is the cost of Greshak's external equity?

What information did you use to come to your conclusion : What information did you use to come to your conclusion? How might managers in this company best leverage their market power to maximize profits?

What is your best estimate of aftertax cost of debt : What is the company’s total book value of debt? What is your best estimate of the aftertax cost of debt?

User Account

All Pages