Question: Please provide the steps Question 3 Encorre Ltd. has a target debt-equity ratio of 0.66. Its WACC is 8.8%, and the tax rate is 28%.

Please provide the steps Please provide the steps Question 3 Encorre Ltd. has a target debt-equity

Question 3 Encorre Ltd. has a target debt-equity ratio of 0.66. Its WACC is 8.8%, and the tax rate is 28%. (a) If Encorre Ltd.'s cost of equity is 11%, what is its pre-tax cost of debt? (6 points) (b) If instead, you know that the after-tax cost of debt is 6.5%, what is the cost of equity? (3 points) (c) The Bank of Canada is expecting to increase interest rates this year. Will this have any impact on the cost of equity capital? Explain your answer as it relates to the overall cost of capital (3 points)

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