1. Phil's Carvings, Inc. wants to have a weighted average cost of capital of 8%. The firm has an after- tax cost of debt of 5% and a cost of equity of 11%. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital? (1 Point) 0.40 0.50 0.60

1. Phil's Carvings, Inc. wants to have a weighted average cost of capital of 8%. The firm has an after- tax cost of debt of 5% and a cost of equity of 11%. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital? (1 Point) 0.40 0.50 0.60

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. Phil's Carvings, Inc. wants to have a weighted average cost of capital of 8%. The firm has an after-
tax cost of debt of 5% and a cost of equity of 11%. What debt-equity ratio is needed for the firm
to achieve its targeted weighted average cost of capital? *
(1 Point)
0.40
0.50
0.60
0000

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