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What should your firm debt-equity ratio be

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Reference no: EM132509513

Assume that your firm has a cost of equity of 15% and a pre-tax cost debt of 8%. The current tax rate for your firm is 25%. Your firm has never issued, and will not issue preferred stocks. You are now planning to change the capital structure of your firm. You want the firm's WACC to be 12%. What should your firm's Debt-Equity ratiobe? (Debt-Equity ratio =Wd/We.)

Reference no: EM132509513

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