Solved: Evaluate the cost of equity, Finance Basics

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Evaluate the cost of equity

Problem:

Kose Inc has a target debt equity ratio of .65. Its WACC is 11.2 percent, and the tax rate is 35 %.

If Kose's cost of equity is 15%, what is its pretax cost of debt?

If instead you know that the after tax cost of debt is 6.4 percent, what is the cost of equity?

Please show your work.

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Finance Basics: Evaluate the cost of equity

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