Let % debt be x
WACC = Cost of Debt*Weight of Debt + Cost of Equity*Weight of Equity
9.8% = 6.5%(1-35%)*x + 13%(1-x)
9.8% = 4.225x + 13% - 13%x
x = 36.47%
Hence, Debt equity ratio = 36.47/(100-36.47)
= 0.5741
It has been assumed that cost of debt is given before tax
1. Fama's has a WACC of 9.8%. The company's cost of equity is 13%, and its cost of debt is 6.5%. The tax-rate is 35...
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
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 >
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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....
what is the WACC?
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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?
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
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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