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What is the cost of equity

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Question - The management team of Alcaraz Industries has approved a target debt-equity ratio of 0.79. Its WACC is 9.8%, and the tax rate is 35%.

a. If the company's cost of equity is 14%, what is its pre-tax cost of debt?

b. If instead you know that the after-tax cost of debt is 6.8%, what is the cost of equity?

Reference no: EM133159568

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