15. Design Interiors has a cost of equity of 18.6 percent and a pretax cost of debt of 9.7 percent. The firm's target weighted average cost of capital is 12 percent and its tax rate is 35 percent. What is the firm's target debt-equity ratio?

(A) 0.81

(B) 0.87

(C) 0.98

(D) 1.02

(E) 1.16

ANS: E

WACC=RE*E/(D+E)+ RD*D/(D+E)*(1-t)=18.6%*E/(D+E)+ 9.7%*D/(D+E)*(1- 35%)=12%

D/E=1.16

i do not know how to solve this fomula WACC to find out D/E is equal to 1.16