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Arbitrary FirmName Ltd has a target debt-equity ratio of 0.70. Its weighted average cost of...

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Accounting

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Arbitrary FirmName Ltd has a target debt-equity ratio of 0.70. Its weighted average cost of capital (WACC) under a classical tax system is 8.20% and the corporate tax rate is 22.50%. A) If Arbitrary FirmName's cost of equity is 12.00%, what is their pre-tax cost of debt? % (Round your answer to two decimal places) B) If Arbitrary FirmName's after-tax cost of debt is 2.80%, what is their cost of equity? % (Round your answer to two decimal places)

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