Butler, Inc., has a target debt-equity ratio of .45. Its WACC is 9.6 percent and the tax

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Butler, Inc., has a target debt-equity ratio of .45. Its WACC is 9.6 percent and the tax rate is 21 percent.

a. If the company’s cost of equity is 12.4 percent, what is its pretax cost of debt?

b. If instead you know that the aftertax cost of debt is 5.7 percent, what is the cost of equity?

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Corporate Finance Core Principles And Applications

ISBN: 9781260571127

6th Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

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Question Posted: Nov 13, 2020 05:03 AM

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Butler, Inc., has a target debt-equity ratio of .45. Its WACC is 9.6 percent and the tax

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Corporate Finance Core Principles And Applications

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