Butler, Inc., has a target debt-equity ratio of 1.60. Its WACC is 7.8 percent, and the tax rate is 25 percent. a. If the company's cost of equity is 12.9 percent, what is its pretax cost of debt? (Do...


Butler, Inc., has a target debt-equity ratio of 1.60. Its WACC is 7.8 percent, and the tax rate<br>is 25 percent.<br>a. If the company's cost of equity is 12.9 percent, what is its pretax cost of debt? (Do not<br>round intermediate calculations and enter your answer as a percent rounded to 2<br>decimal places, e.g., 32.16.)<br>b. If instead you know that the aftertax cost of debt is 4.3 percent, what is the cost of<br>equity? (Do not round intermediate calculations and enter your answer as a percent<br>rounded to 2 decimal places, e.g., 32.16.)<br>a. Pretax cost of debt<br>%<br>b. Cost of equity<br>%<br>

Extracted text: Butler, Inc., has a target debt-equity ratio of 1.60. Its WACC is 7.8 percent, and the tax rate is 25 percent. a. If the company's cost of equity is 12.9 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., 32.16.) b. If instead you know that the aftertax cost of debt is 4.3 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., 32.16.) a. Pretax cost of debt % b. Cost of equity %

Jun 07, 2022
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