The Bird Carver has a target WACC of 9.5 percent.The firm has an aftertax cost of debt of 5.4 percent and a cost of equity of 14 percent.What debt-to-equity ratio is needed for the firm to achieve its target WACC?

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The correct answer is A.The debt-to-equity ratio is calculated as follows:Debt-to-equity ratio = (After-tax cost of debt * Debt) / (Cost of equity * Equity)Substituting the given values, we get:Debt-to-equity ratio = (5.4% * Debt) / (14% * Equity)We want the target WACC to be 9.5%, which can be expressed as:WACC = (After-tax cost of debt * Debt-to-equity ratio) + (Cost of equity * (1 - Debt-to-equity ratio))Substituting the given values, we get:9.5% = (5.4% * Debt-to-equity ratio) + (14% * (1 - Debt-to-equity ratio))Solving for Debt-to-equity ratio, we get:Debt-to-equity ratio = 0.75

The Bird Carver Has a Target WACC of 9