23. A firm wants to create a weighted average cost of capital (WACC) of 9.5 percent. The firm's cost of equity is 11 percent and its pre-tax cost of debt is 9 percent. The tax rate is 35 percent. What does the debt-equity ratio need to be for the firm to achieve its target WACC? A). .28 B). .37 C). .41 D). .54 ). .59 24. The Five and Dime Store has a cost of equity of 15.8 percent, a pretax cost of debt of 7.7 percent, and a tax rate of 35 percent. What is the firm's weighted average cost of capital if the debt-equity ratio is 0.40? A). 10.18 percent B). 11.72 percent C). 12.72 percent D). 13.49 percent E). 14.93 percent What is the beta of a portfolio made up of two risky assets and a risk-free asset? You invest 40% in asset A with a beta of 1.25 and 40% in asset B with a beta of 1.15 25. A) 0.84 B) 0.96 C) 1.03 D) 1.12 E) 1.20 Stock A has an expected return of 14 percent and a beta of 1.3. Stock B has an expected return of 10 percent and a beta of .9. Both stocks have the same reward 26. to-risk ratio. What is the risk-free rate? A). 1.0 percent B). 1.8 percent C). 2.3 percent D). 2.5 percent E). 3.1 percent