Down Bedding Has an Unlevered Cost of Capital of 13

question 8

Multiple Choice

Down Bedding has an unlevered cost of capital of 13 percent, a cost of debt of 7.8 percent, and a tax rate of 32 percent. What is the target debt-equity ratio if the targeted cost of equity is 15.51 percent?

• A).63
• B).68
• C).71
• D).76
• E).84

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