If the aftertax cost of debt is 38 percent what is the cost


Clifford, Inc., has a target debt-equity ratio of .85. Its WACC is 8.1 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 debt is 3.8 percent, what is the cost of equity?

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Financial Management: If the aftertax cost of debt is 38 percent what is the cost
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