Central systems inc has a weighted average cost of capital, Ask an Expert

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Central Systems, Inc. has a weighted average cost of capital of 8 percent. The firm has an after-tax cost of debt of 5 percent and a cost of equity of 10 percent. What is the firm's debt-equity ratio?

HINT: First get the capital structure weights. Remember they must both sum to one, so (1 - D/V) = E/V.
Now use those weights to get the debt-equity ratio.

.67
.77
.84
.57
.50

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Reference No.:- M9867328

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