What is the firms debt-equity ratio

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Reference no: EM13811754

Central Systems, Inc. has a weighted average cost of capital of 8 percent. The firm has an after-tax cost of debt of 4 percent and a cost of equity of 12 percent. What is the firm's debt-equity ratio?

HINT: First get the capital structure weights. Remember they must both sum to one, so (1 - D/V) = E/V.

Now use those weights to get the debt-equity ratio.

1.10

.90

1.17

.83

1.00

Reference no: EM13811754

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