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Jade Inc. has identified some valuable growth opportunities and would like to maximize these opportunities for their shareholders. Management has decided that they want to

Jade Inc. has identified some valuable growth opportunities and would like to maximize these opportunities for their shareholders. Management has decided that they want to accomplish this goal by adjusting their capital structure in an attempt to decrease their cost if capital, and have identified a target weighted average cost of capital of 8.6%. The firm currently has an after-tax cost of debt of 4.2% and a cost of equity of 10.7%.

If Jade is to meet their target weighted average cost of capital, what debt-equity ratio is needed?

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