1. Fama's Llamas has a weighted average cost of capital of 13 percent. The company's cost of equity is 17.5 percent, and its pretax cost of debt is 8 percent. The tax rate is 32 percent. What is the company's target debt-equity ratio? (Do not round your intermediate calculations.)
0.5952
0.9
0.619
0.5655
0.625
2. Each year you sell 950 units of a product at a price of $899 each. The variable cost per unit is $575 and the carrying cost per unit is $16.90. You have been buying 100 units at a time. Your fixed cost of ordering is $60. The total annual carrying cost is _______ and the total restocking cost is _______.
a. $845 ; 1,140
b. $1,690 ; 1,140
c. $845 ; $570
d. $950 ; $620
e. $1,690 ; $845