Question
NVC Inc. has a weighted average cost of capital of 10.5 percent. The company's cost of equity (Re) is 15.5 percent, and its pretax cost
NVC Inc. has a weighted average cost of capital of 10.5 percent. The company's cost of equity (Re) is 15.5 percent, and its pretax cost of debt (Rd) is 8.5 percent. The tax rate (t) is 34 percent. What is the company's target debt-to-equity (D/E) ratio?
a. 1.28 b. 0.92 c. 1.02 d. 1.06 e. 0.98
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Financial Markets and Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
8th edition
013342362X, 978-0133423624
