Central Systems,Inc

question 34

Multiple Choice

Central Systems,Inc.desires a weighted average cost of capital of 8 percent.The firm has an aftertax cost of debt of 5.4 percent and a cost of equity of 15.2 percent.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

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