What is the company target debt-equity ratio

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Reference no: EM131919779

1. Fama's Llamas has a weighted average cost of capital of 13 percent. The company's cost of equity is 17.5 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.)

0.5952

0.9

0.619

0.5655

0.625

2. Each year you sell 950 units of a product at a price of $899 each. The variable cost per unit is $575 and the carrying cost per unit is $16.90. You have been buying 100 units at a time. Your fixed cost of ordering is $60. The total annual carrying cost is _______ and the total restocking cost is _______.

a. $845 ; 1,140

b. $1,690 ; 1,140

c. $845 ; $570

d. $950 ; $620

e. $1,690 ; $845

Reference no: EM131919779

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