Problem:
Central Systems, Inc. desires a weighted average cost of capital of 8%. The firm has an aftertax cost of debt of 5.4 % and a cost of equity of 15.2%.
Required:
Question: What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?
A. 0.38
B.0.44
C.1.02
D. 2.77
E. 3.63
Note: Please show guided help with steps and answer.