What is the companys target debt-equity ratio

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Reference no: EM131185777

Fama's Llamas has a weighted average cost of capital of 12 percent. The company's cost of equity is 15.5 percent, and its pretax cost of debt is 8 percent. The tax rate is 32 percent. What is the company's target debt-equity ratio? (Do not round your intermediate calculations.)

A) 0.875

B) 0.5069

C) 0.5549

D) 0.5335

E) 0.5602

Reference no: EM131185777

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