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What is the cost of common equity assuming a tax rate

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1. Joseph Smith, Amtrax's CFO wants to maintain a target debt-to-equity ratio of 1/4. If the WACC is 16.5%, and the pretax cost of debt is 8%, what is the cost of common equity assuming a tax rate of 40%?

2. Organii-tech Inc. is financed 60% with equity and 40% with debt. Currently, its debt has a before-tax interest rate of 10%. Organii-tech's common stock trades at $15 per share and its most recent dividend was $1.00. Future dividends are expected grow by 4%. If the tax rate is 37%, what is Organii-tech's WACC?

Reference no: EM132466969

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