Jungle, Inc., has a target debt−equity ratio of 0.84. Its WACC is 11.5 percent, and the tax rate is 34 percent.

Question

Required:

(a)
If Jungle's cost of equity is 14.5 percent, its pretax cost of debt is percent.


(b) If instead you know the aftertax cost of debt is 6.5 percent, the cost of equity is percent.

Answer 1

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