1. Hull Inc.’s WACC is 12.25%. The company’s cost of equity is 18% and its cost of debt is 10%. If the tax rate is 40%, what is Hull’s target debt/equity ratio?
2. Gilder Inc. has a target debt/equity ratio of 1.4. Its WACC is 12% and the tax rate is 40%. If the pretax cost of debt is 8%, what is the cost of equity?
3. Royal Jewelers Inc. has an aftertax cost of debt of 11.75 percent. With a tax rate of 37 percent, what can you assume the yield on the debt is? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)