What is the cost of debt, The corporate tax rate is 20%. If the levered firm value (VL), HR Management

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What is the cost of debt

Problem

Imagine a firm with the first year FCF of $22M. You expect the FCFs to grow 2.50% per year indefinitely. This firm's capital structure is as follows: Debt represents 54% of the total capital. Equity represents 46% of the total capital and the cost of equity is 9.60%. The corporate tax rate is 20%. If the levered firm value (VL) is $500M, what is the (pre-tax) cost of debt?

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