Business Finance
posted by Matt .
Jungle, Inc., has a target debt−equity ratio of 0.72. Its WACC is 11 percent, and the tax rate is 31 percent. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))
Required:
(a) If Jungle's cost of equity is 14 percent, its pretax cost of debt is percent.
(b) If instead you know the aftertax cost of debt is 6.7 percent, the cost of equity is percent.
Explanation:
(a): Using the equation to calculate WACC, we find:
WACC = 0.11 = (1/1.72)(0.14) + (0.72/1.72)(1 – 0.31)RD
RD = 0.099 or 9.9%
(b): Using the equation to calculate WACC, we find:
WACC = 0.11 = (1/1.72)RE + (0.72/1.72)(0.067)
RE = 0.141 or 14.1%
In this example problem, how would you find the formulas for RE and RD?

Business Finance 
Imanul bahirah
I don't know to find formula
Respond to this Question
Similar Questions

Financial Management
Reading Foods is interested in calculating its weighted average cost of capital (WACC). The company’s CFO has collected the following information: • The target capital structure consists of 40 percent debt and 60 percent common … 
Math (Accounting)
Reading Foods is interested in calculating its weighted average cost of capital (WACC). The company’s CFO has collected the following information: • The target capital structure consists of 40 percent debt and 60 percent common … 
Accounting PLEASE HELP!!!!!!!!!
Reading Foods is interested in calculating its weighted average cost of capital (WACC). The company’s CFO has collected the following information: • The target capital structure consists of 40 percent debt and 60 percent common … 
Finance
Jungle, Inc. has a target debtequity ratio of 0.72. Its WACC is 11.5 percent and the tax rate is 34 percent. What is the cost of equity if the aftertax cost of debt is 5.5 percent? 
finance
The Nutrex Corporation wants to calculate its weighted average cost of capital. Its target capital structure weights are 40 percent longterm debt and 60 percent common equity. The beforetax cost of debt is estimated to be 10 percent … 
Finance
a firm wants to create a weighted average cost of capital (WACC) of 10.4 percent. The firm's cost of equity is 14.5 percent and its pretax cost of debt is 8.5 percent. The tax rate is 34 percent. What does the debt weight need to … 
finance
5.Capital Co. has a capital structure, based on current market values, that consists of 21 percent debt, 9 percent preferred stock, and 70 percent common stock. If the returns required by investors are 10 percent, 12 percent, and 17 … 
Corporate Finance
5.Capital Co. has a capital structure, based on current market values, that consists of 21 percent debt, 9 percent preferred stock, and 70 percent common stock. If the returns required by investors are 10 percent, 12 percent, and 17 … 
Finance
Jungle, Inc., has a target debt−equity ratio of 0.84. Its WACC is 11.5 percent, and the tax rate is 34 percent. Required: (a) If Jungle's cost of equity is 14.5 percent, its pretax cost of debt is percent. (b) If instead you … 
Finance
The ACME Suction Cup company has $4,500 of debt and $10,500 of common stock equity. The total value of the company is $15,000. The company's cost of equity is 11.5 percent, the cost of debt is 5.9 percent and the relevant tax rate …