Phil's Carvings, Inc. wants to have a weighted average cost of capital of 8.5 percent. The firm has an aftertax cost of debt of 6.0 percent and a cost of equity of 12.0 percent. What debt-equity ratio is needed for the firm to achieve their targeted weighted average cost of capital?

Multiple Choice

0.70

2.40

1.71

1.40

0.71