What is the cost of equity for the company

Reference no: EM13279581

A company is known to have a target debt-equity ratio of 0.60. Its WACC is 13.80 percent, and the tax rate is 35 percent.

a. If the cost of equity is 18 percent this company, what is its pretax cost of debt?

b. If the after-tax cost of debt is 7.5 percent, what is the cost of equity for the company?

(Note: The cost of equity you find here Part b may well be different than 18 percent).

Reference no: EM13279581

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