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A firm is financed with debt that has a market beta of 0.3 and equity that has a market beta of 1.2. The risk-free rate

A firm is financed with debt that has a market beta of 0.3 and equity that has a market beta of 1.2. The risk-free rate is 3%, and the equity premium is 5%. The overall cost of capital for the firm is 8%. What is the firms debt-equity ratio?

a) 28.6%

b) 25.0%

c) 74.8%

d) 25.2%

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