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 percent. Assume that there are no taxes, the firm has a cost of debt of 5 percent and a cost of equity of 10 percent.

Required:

Question: What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?

Note: Show all workings.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91172598

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