Fama's Llamas has a weighted average cost of capital of 12 percent. The company's cost of equity is 16.5 percent, and its pretax cost of debt is 8 percent. The tax rate is 31 percent. What is the company's target debt-equity ratio?
After-tax cost of debt=8*(1-tax rate)
=8*(1-0.31)=5.52%
Let debt be $x
Equity be $y
Total=$(x+y)
WACC=Respective costs*Respective weight
12=(x/(x+y)*5.52)+(y/(x+y)*16.5)
12*(x+y)=5.52x+16.5y
12x+12y=5.52x+16.5y
x=(16.5-12)y/(12-5.52)
=0.6944y
Hence debt-equity ratio=Debt/equity
=0.6944(Approx).
Fama's Llamas has a weighted average cost of capital of 12 percent. The company's cost of...
Fama's Llamas has a weighted average cost of capital of 12 percent. The company's cost of equity is 17 percent, and its pretax cost of debt is 7 percent. The tax rate is 31 percent. What is the company's target debt-equity ratio? 0.7252 0.6974 0.6625 0.7322
Fama's Llamas has a weighted average cost of capital of 10.5 percent. The company's cost of equity is 17 percent, and its pretax cost of debt is 8 percent. The tax rate is 34 percent. What is the company's target debt-equity ratio? Check my work Fama's Llamas has a weighted average cost of capital of 10.5 percent. The company's cost of equity is 17 percent, and its pretax cost of debt is 8 percent. The tax rate is 34 percent....
Fama's Llamas has a weighted average cost of capital of 9.3 percent. The company's cost of equity is 12 percent, and its pretax cost of debt is 6.6 percent. The tax rate is 21 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., 32.1616.) Debt-equity ratio
Fama's Llamas has a weighted average cost of capital of 11.5 percent. The company's cost of equity is 17 percent, and its pretax cost of debt is 8.5 percent. The tax rate is 34 percent. What is the company's target debt-equity ratio? (Do not round your intermediate calculations.)
Fama's Llamas has a weighted average cost of capital of 9.6 percent. The company's cost of equity is 11 percent, and its pretax cost of debt is 6.9 percent. The tax rate is 24 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
Type yo Fama's Llamas has a weighted average cost of capital of 10.5 percent. The company's cost of equity is 17 percent, and its pretax cost of debt is 8.5 percent. The tax rate is 34 percent. What is the company's target debt-equity ratio? (Do not round your intermediate calculations.) rev: 09_20_2012 1.2628 3.25 1.3957 1.3824 1.3292
Finding the Capital Structure Fama's Llamas has a weighted average cost of capital of 9.1 percent. The company's cost of equity is 11 percent and its cost of debt is 6.4 percent. The tax rate is 21 percent. What is the company's debt-equity ratio? (Do not round your intermediate calculations.)
Could Use Help On Question. Thank You.Co Fama's Llamas has a weighted average cost of capital of 9.6 percent. The company's cost of equity is 11 percent, and its pretax cost of debt is 6.9 percent. The tax rate is 24 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., 32.1616.) Debt-equity ratio 0.3074(
Chapter 13 Problems * Saved Fama's Llamas has a weighted average cost of capital of 9.8 percent. The company's cost of equity is 13.4 percent, and its cost of debt is 7.9 percent. The tax rate is 23 percent. What is the company's debt equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) 0.58 points Debt-equity ratio etlook Hint References < Prev 16 of 17 !! Next >
Fama's Llamas has a WACC of 8.95 percent. The company's cost of equity is 10.4 percent, and its pretax cost of debt is 5.3 percent. The tax rate is 21 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., 32.1616.) Debt-equity ratio