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What debt-equity ratio should be used in order to keep wacc

Problem 1: What is the proportion of debt financing for a firm that expects a 24% return on equity, a 16% return on assets, and a 12% return on debt? Ignore taxes.

Problem 2: A firm has an expected return on equity of 16% and an after-tax cost of debt of 8%. What debt-equity ratio should be used in order to keep the WACC at 12%?

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Finance Basics: What debt-equity ratio should be used in order to keep wacc

Reference No:- TGS02084265

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