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Problem:

Webster's Watering Hole must maintain a weighted average cost of capital of 9% to satisfy covenants in the bond indenture. Analysts forecast the after tax cost of debt of 5% and a cost of equity of 11%.

Required:

Question: What debt-equity ratio must be employed to meet the targeted WACC?

Note: Show all workings.

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Category:- Basic Finance
Reference No.:- M91175266

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