Dallas Interiors has a cost of equity of 18.6 percent and a pre-tax cost of debt of 9.7 percent. The firm's target weighted average cost of capital is 10.8 percent and its tax rate is 35 percent. What is the firm's target debt-equity ratio?
A) 0.81
B) 0.87
C) 1.18
D) 1.32
E) 1.74
Correct Answer:
Verified
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