Famarsquos llamas has a weighted average cost of capital of


Fama’s Llamas has a weighted average cost of capital of 10.1 percent. The company’s cost of equity is 13 percent, and its pretax cost of debt is 8.1 percent. The tax rate is 40 percent. What is the company’s target debt−equity ratio?

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Financial Management: Famarsquos llamas has a weighted average cost of capital of
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