What is the pretax cost of debt

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Reference no: EM132055695

Problem: WACC

Blue Bull, Inc., has a target debt-equity ratio of .71. Its WACC is 8.5 percent, and the tax rate is 34 percent.

Required: (a) If the company's cost of equity is 11.1 percent, what is its pretax cost of debt?(Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Pretax cost of debt %

(b) If the aftertax cost of debt is 5.3 percent, what is the cost of equity? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Cost of equity %

Reference no: EM132055695

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