Problemcentral systems inc desires a weighted average cost, Ask an Expert

Accounting

Problem:

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

Required:

Question: 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

Note: Please show guided help with steps and answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91167621

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