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Targeted weighted average cost of capital

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Central Systems, Inc. desires a weighted average cost of capital of 10 percent. The firm has an after-tax cost of debt of 6 percent and a cost of equity of 12 percent. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?

  • .67
  • .60
  • .50
  • .40
  • .33

 

Reference no: EM131238222

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