Kose Inc has a target debt equity ratio of 65 Its
Kose, Inc., has a target debt-equity ratio of .65. Its WACC is 11.2 percent, and the tax rate is 35 percent.
a. If Kose’s cost of equity is 15 percent, what is its pretax cost of debt?
b. If instead you know that the aftertax cost of debt is 6.4 percent, what is the cost of equity?
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