A firm has an expected return on equity of 16% and an after-tax cost of debt of 8%. What debt-equity ratio should be used in order to keep the WACC at 12%? A) .50 B) .75 C) 1.00 D) 1.50
What is the proportion of debt financing for a firm that expects a 24% return on equity, a 16% return on assets, and a 12% return on debt? (ignore taxes) A) 54.0% B) 60.0% C) 66.7% D) 75.0%
I'm unable to calculate this, could someone help me maybe? Claire