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Texas Tamales has an after-tax cost of debt of 5.2 percent and a cost of equity of 18.9 percent (assume for this problem that these

Texas Tamales has an after-tax cost of debt of 5.2 percent and a cost of equity of 18.9 percent (assume for this problem that these costs do not change with the capital structure). Their CFO desires a weighted average cost of capital of 10.1 percent.

What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?

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