Problem:
Black and White has a cost of equity of 11 percent and a pre-tax cost of debt of 8.5 percent. The firm's target weighted average cost of capital is 9 percent and its tax rate is 35 percent.
Required:
Question: What is the firm's target debt-equity ratio?
- 48.29
- 51.13
- 55.72
- 57.56
- 62.03
Note: Solve the problem and show all work.