Question
A firm desires a WACC of 8.4 percent. Its cost of equity is 11.2 percent and its pre-tax cost of debt is 7.1 percent. The
A firm desires a WACC of 8.4 percent. Its cost of equity is 11.2 percent and its pre-tax cost of debt is 7.1 percent. The firm does not issue preferred stock. The tax rate is 38 percent. What must the debt- equity ratio of the firm be if it is to achieve its target WACC? a. .59 b. .63 c. .67 d. .70
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Finance For Executives Managing For Value Creation
Authors: Gabriel Hawawini, Claude Viallet
7th Edition
1473778913, 978-1473778917
