Solved: Blue bull inc has a target debt-equity ratio of 55 its wacc, Accounting Basics

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Blue bull inc has a target debt-equity ratio of 55 its wacc

Blue bull, Inc., has a target debt-equity ratio of .55. Its WACC is 8.8 percent, and the tax rate is 35 percent.

(a) If the company's cost of equity is 11 percent, what is its pretax cost of debt?

(b) If the aftertax cost of the debt is 3.8 percent, what is the cost of equity?

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Accounting Basics: Blue bull inc has a target debt-equity ratio of 55 its wacc

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