What is the target debt-equity ratio

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1. ABC has an unlevered cost of capital (Ra) of 16.8%, a cost of debt of 7.4%and a tax rate of 0%. What is the target debt-equity ratio if the targeted cost of equity (Rs) is 21.8%?

2. ABC has a debt-equity ratio of 0.6. The firm’s weighted average cost of capital is 15.9% and its pre-tax cost of debt is 9.6%. Assume no taxes. What is ABC’s cost of equity capital (Rs)?

3. ABC has an unlevered cost of capital (Ra) of 15.1%, a cost of debt of 7.4%and a tax rate of 0%. What is the cost of equity for a firm (Rs) with a weight of debt of 62%?

Reference no: EM131969467

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