The companys cost of equity is 118 percent and its pretax


Fama’s Llamas has a WACC of 9.6 percent. The company’s cost of equity is 11.8 percent, and its pretax cost of debt is 7.6 percent. The tax rate is 35 percent. What is the company’s target debt–equity ratio?

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Financial Management: The companys cost of equity is 118 percent and its pretax
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