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Design interiors has a cost of equity of 18.6% and pretax cost of debt of 8%. The firms target weighted average cost of capital is

Design interiors has a cost of equity of 18.6% and pretax cost of debt of 8%. The firms target weighted average cost of capital is 12% and its tax rate is 40%. What is the firms target debt-equity ratio?

a. 0.85

b. 0.92

c. 0.97

d. 0.98

e. 0.89

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