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An unlevered company's cost of equity stands at 11%. The company considers replacing part of its equity with debt. The company evaluates a co of
An unlevered company's cost of equity stands at 11%. The company considers replacing part of its equity with debt. The company evaluates a co of debt of 6.75%. The company's target levered cost of equity is 13.5% and corporate income tax rate is 25%.
What will be the company's D/A ratio after it achieves its target levered cost of equity? Provide the answer with precision of two decimal places. E.g. if the answer is 0.5678 then please type
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