What is the companys target debt-equity ratio

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Reference no: EM13940268

Fama’s Llamas has a weighted average cost of capital of 9.2 percent. The company’s cost of equity is 12 percent, and its pretax cost of debt is 7.2 percent. The tax rate is 40 percent. What is the company’s target debt−equity ratio? (Do not round intermediate calculations and round your final answer to 4 decimal places. (e.g., 32.1616))

Debt−equity ratio

Reference no: EM13940268

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What is the companys target debt-equity ratio : Fama’s Llamas has a weighted average cost of capital of 9.2 percent. The company’s cost of equity is 12 percent, and its pretax cost of debt is 7.2 percent. The tax rate is 40 percent. What is the company’s target debt−equity ratio?

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