What is the company target debt-equity ratio

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Reference no: EM131923954

1. Fama's Llamas has a weighted average cost of capital of 12 percent. The company's cost of equity is 16.5 percent, and its pretax cost of debt is 8.5 percent. The tax rate is 33 percent. What is the company's target debt-equity ratio? (Do not round your intermediate calculations.)

0.7494

0.678

1.2857

0.7423

0.7137

2. A stock has a beta of 0.9, the expected return on the market is 14 percent, and the risk-free rate is 6.3 percent. What must the expected return on this stock be?

13.89%

18.9%

12.57%

13.76%

13.23%

Reference no: EM131923954

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