Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Central Systems, Inc. desires a weighted average cost of capital of 8.5 percent. The firm has an aftertax cost of debt of 6.5 percent and
Central Systems, Inc. desires a weighted average cost of capital of 8.5 percent. The firm has an aftertax cost of debt of 6.5 percent and a cost of equity of 10.2 percent. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?
0.85
0.65
1.75
1.17
2.25
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started