What debt-equity ratio is needed for the firm

Assignment Help Financial Management

Reference no: EM132014483

Phil's Carvings, Inc. wants to have a weighted average cost of capital of 9.1%. The firm has an after-tax cost of debt of 4.8% and a cost of equity of 10.9%.

What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital? (Round answer to 4 decimal places, round intermediate calculations to 5 decimal places)

Reference no: EM132014483

Questions Cloud

Preparing company statement of cash flows : In the course of preparing a company's statement of cash flows, What will the net effect of these items be in the statement of cash flows?

Calculate project profitability index : Suppose you calculate a Project’s profitability index to be 1.4, what does it mean?

What is the value of the merger : What is the value of ABC following the merger?

What is the value of the option to wait : What is the value of the option to wait?

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

What is the post-merger value per share : What is the post-merger value per share?

What will the total variable cost estimate be : If the company conducts a sensitivity analysis using a variable cost of $12, what will the total variable cost estimate be?

Proposed project using standard sensitivity analysis : Southern Goods is analyzing a proposed project using standard sensitivity analysis.

The initial cash flow for this building project : What amount should be used as the initial cash flow for this building project?

User Account

All Pages