Phil's Carvings,Inc

question 22

Multiple Choice

Phil's Carvings,Inc. wants to have a weighted average cost of capital of 9%. The firm has an after-tax cost of debt of 5% and a cost of equity of 11%. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?

• A) .33
• B) .40
• C) .50
• D) .60
• E) .67

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Definitions:

Needs

Essential or very important requirements necessary for people to live or succeed.

Interests

The motives, desires, or needs that individuals or parties aim to satisfy through negotiations.

Integrative Negotiation Process

A negotiation approach focused on collaboration to find win-win solutions that satisfy the interests of all parties involved.

Process

A series of actions or steps taken in order to achieve a particular end.