Targeted weighted average cost of capital


Phil's Carvings, Inc. wants to have a weighted average cost of capital of 9%. The firm has an after-tax cost of debt of 5 %and a cost of equity of 11%. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?

A. 33

B. 40

C. 50

D. 60

E. 67

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Accounting Basics: Targeted weighted average cost of capital
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