Need correct answer general accounting Mountain Valley Corporation has a weighted average cost ofcapital of 9.5 percent. The company's cost of equity is 12percent, and its pretax cost of debt is 7 percent. The corporatetax rate is 30 percent. What is the company's target debt-equity ratio?

Step 1: Define Debt-Equity RatioThe Debt-Equity Ratio measures a company's financial leverage by…

Answered: Mountain Valley Corporation has a…

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

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Mountain Valley Corporation has a weighted average cost of capital of 9.5 percent. The company's cost of equity is 12 percent, and its pretax cost of debt is 7 percent. The corporate tax rate is 30 percent. What is the company's target debt- equity ratio?