Calculate corsair target debt-equity ratio

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Reference no: EM132033013

1. Analysts' expected earnings for Alexas for next two years are: 2006: $2.00 2007: $2.23 Cost of equity is 15%. Return on equity is expected to equal cost of equity from 2008 onwards. Dividend payout ratio is expected to remain the same for 2006 and 2007. Price per share at the end of 2005 would be closest to:

a. $59.45 b. $9.81 c. $25.00 d. $0

2. Calculate Corsair’s target debt-equity ratio using the following information.

WACC 7.76 percent

Cost of equity 9.5 percent

Cost of debt (pretax) 6.4 percent

Tax rate 35 percent

Reference no: EM132033013

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