Fama’s Llamas has a WACC of 9.7 percent. The company’s cost of equity is 12 percent, and its pretax cost of debt is 7.5 percent. The tax rate is 35 percent.
What is the company’s target debt–equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)
Debt–equity ratio = ?