xel Industries wants to have a weighted average cost of capital of 10 per cent. The company has an aftertax cost of debt of 8 per cent and a cost of equity of 20 per cent. What debt-equity ratio does the company need for to achieve its targeted weighted average cost of capital? Explain your findings

xel Industries wants to have a weighted average cost of capital of 10 per cent. The company has an aftertax cost of debt of 8 per cent and a cost of equity of 20 per cent. What debt-equity ratio does the company need for to achieve its targeted weighted average cost of capital? Explain your findings

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 5P

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Phil's Carvings Inc wants to have a weighted average cost of capital of 9.8 percent. The firm has an after- tax cost of debt of 6.6 percent and a cost of equity of 13.2 percent. What debt-equity ratio is needed for the firm to achieve their targeted weighted average cost of capital?
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