Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Kose, Inc., has a target debt-equity ratio of 1.63. Its WACC is 7.4 percent, and the tax rate is 25
percent.
Required:
If the company's cost of equity is 15 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., 3216.)
a.
b.
If instead you know that the aftertax cost of debt is 5.6 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., 3216.)
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