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QUESTION
Kose, Inc., has a target debt-equity ratio of 0.8. Its WACC is 11 percent, and the tax rate is 31 percent. If Kose's cost of equity is 15 percent,
Kose, Inc., has a target debt-equity ratio of 0.8. Its WACC is 11 percent, and the tax rate is 31 percent.
If Kose's cost of equity is 15 percent, what is its pretax cost of debt?
If instead you know that the aftertax cost of debt is 6.5 percent, what is the cost of equity?
