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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

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