Question
A firm wants to create a WACC of 11.4%. The firms cost of equity is 14.7% and the pre- tax cost of debt is 7.5%.
A firm wants to create a WACC of 11.4%. The firms cost of equity is 14.7% and the pre- tax cost of debt is 7.5%. The tax rate is 34%. What does its target debt ratio need to be for the firm to achieve its target WACC of 11.4%?
a. 35.35% b. 33.85% c. 53.88% d. 46.12%
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Fundamentals Of Corporate Finance
Authors: Stephen A Ross, Randolph W Westerfield, Bradford D Jordan
7th Edition
0073134295, 9780073134291
