What is acetate debt-equity ratio


Question:

Acetate Inc, has common stock with a market value of $20 million and debt with a market value of $10 million. The cost of the debt is 14 percent. The current treasury-bill rate is 8 percent, and the expected market premium is 10 percent. The beta on Acetate equity is 0.9.

a. What is Acetate debt-equity ratio?

b. What is the firm's overall required return?

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Finance Basics: What is acetate debt-equity ratio
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