Question
Fama's Llamas has a weighted average cost of capital of 12.5 percent. The company's cost of equity is 16 percent, and its pretax cost of
| Fama's Llamas has a weighted average cost of capital of 12.5 percent. The company's cost of equity is 16 percent, and its pretax cost of debt is 8.5 percent. The tax rate is 33 percent. What is the company's target debt-equity ratio? |
Multiple Choice
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0.875
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0.54
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0.4886
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0.5349
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0.5143
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Investment Analysis And Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown
7th Edition
0324171730, 978-0324171730
