Fama's Llamas has a weighted average cost of capital of 10 percent. The company's cost of equity is 16 percent, and its pretax cost of debt is 7.5 percent. The tax rate is 31 percent. What is the company's target debt-equity ratio? (Do not round your intermediate calculations.)

Multiple Choice

• 2.4

• 1.2933

• 1.2435

• 1.1813

• 1.3057