What is pretax cost of debt

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1. DL Trucking has a cost of equity of 15.4 percent and an unlevered cost of capital of 13.2 percent. The company has $24,000 in debt that is selling at par value. The levered value of the firm is $59,000 and the tax rate is 34 percent. What is the pretax cost of debt?

2. Dakota Co. has expected earnings before interest and taxes of $37,800, an unlevered cost of capital of 12.2 percent, debt with a coupon rate of 5.6 percent, and both a book and face value of $24,000. The tax rate is 35 percent. What is the value of the firm?

Reference no: EM131964350

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