Nikul Fama's Llamas has a WACC of 8.4 percent. The company's cost of equity is 11 percent, and its pretax cost of debt is 5.8 percent. Thetax rate is 25 percent. What is the company's target debt-equity ratio?Note: Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.Debt-equity ratio

Step 1: The calculation of the debt-equity ratio AB1WACC8.40%2Cost of equity11%3Pretax cost of…

Answered: Fama's Llamas has a WACC of 8.4…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 49E

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