Famarsquos llamas has a weighted average cost of capital of


Fama’s Llamas has a weighted average cost of capital of 11 percent. The company’s cost of equity is 13 percent, and its pretax cost of debt is 9 percent. The tax rate is 40 percent. What is the company’s target debt−equity ratio?

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Financial Management: Famarsquos llamas has a weighted average cost of capital of
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