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Fama's Llamas has a weighted average cost of capital of 10.4 percent. The company's cost of equity is 11 percent, and its pretax cost of debt is 6.3 percent. The tax rate is 22 percent. What is the company's target debt-equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.) Debt-equity ratio

Fama's Llamas has a weighted average cost of capital of 10.4 percent. The company's cost of equity is 11 percent, and its pretax cost of debt is 6.3 percent. The tax rate is 22 percent. What is the company's target debt-equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.) Debt-equity ratio

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Fama's Llamas has a weighted average cost of capital of 10.4 percent. The company's cost of equity is 11 percent, and its pretax cost of debt is 6.3 percent. The tax rate is 22 percent. What is the company's target debt-equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g.., 1616.) Debt-equity ratio
Transcribed Image Text:Fama's Llamas has a weighted average cost of capital of 10.4 percent. The company's cost of equity is 11 percent, and its pretax cost of debt is 6.3 percent. The tax rate is 22 percent. What is the company's target debt-equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g.., 1616.) Debt-equity ratio
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