What is company target debt-equity ratio

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Reference no: EM131348133

Fama’s Llamas has a weighted average cost of capital of 10 percent. The company’s cost of equity is 14 percent, and its pretax cost of debt is 8 percent. The tax rate is 38 percent. What is the company’s target debt−equity ratio? (Do not round intermediate calculations and round your final answer to 4 decimal places, e.g., 32.1616.)

Reference no: EM131348133

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What is company target debt-equity ratio : Fama’s Llamas has a weighted average cost of capital of 10 percent. The company’s cost of equity is 14 percent, and its pretax cost of debt is 8 percent. The tax rate is 38 percent. What is the company’s target debt−equity ratio?

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