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Fama's Llamas has a weighted average cost of capital of 12.5 percent. The company's cost of equity is 15.5 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 15.5 percent, and its pretax cost of debt is 9 percent. The tax rate is 35 percent. What is the company's target debt-equity ratio?
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