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What is pretax cost of debt

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Reference no: EM133073250

Clifford, Inc., has a target debt-equity ratio of .95. Its WACC is 7.9 percent, and the tax rate is 25 percent.

a. If the company's cost of equity is 12 percent, what is its pretax cost of debt? (Do not round intermediate calculations and 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 6.4 percent, what is the cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Reference no: EM133073250

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