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12020 Fama's Llamas has a weighted average cost of capital of 8.3 percent. The company's cost of equity is 12 percent, de pretax cost of
12020 Fama's Llamas has a weighted average cost of capital of 8.3 percent. The company's cost of equity is 12 percent, de pretax cost of debt is 4.1 percent. The tax rate is 21 percent. What is the company's target dett-eauty rate? Suggested Formula(s): WACC = Re (E/V) + Rd (DN)(1-T) E = equity value; D = debt value; V=firm value V/E = 1 + D/E Select one: O A. 1.73 B. 0.73 C. 0.27 D. 0.83 E. 1.27
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