Computing the debt-equity ratio


The Outlet has a cost of equity of 16.8 percent, a pre-tax cost of debt of 8.1 percent, and a return on assets of 14.5 percent. Ignore taxes. What is the debt-equity ratio?

1) 0.28

2) 0.36

3) 0.44

4) 0.52

5) 0.57

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Finance Basics: Computing the debt-equity ratio
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