Question: Fama's Llamas has a weighted average cost of capital of 9.5%. The company's cost of equity is 11%, and its cost of debt is 7.5%. The tax rate is 40%. What is the company's debt- equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Question:
Fama's Llamas has a weighted average cost
of capital of 9.5%. The company's cost of
equity is 11%, and its cost of debt is 7.5%. The
tax rate is 40%. What is the company's debt-
equity ratio? (Do not round intermediate
calculations and round your answer to 4
decimal places, e.g., 32.1616.)
Transcribed Image Text:Question: Fama's Llamas has a weighted average cost of capital of 9.5%. The company's cost of equity is 11%, and its cost of debt is 7.5%. The tax rate is 40%. What is the company's debt- equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)
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