contestada

Bob's Warehouse has a pre-tax cost of debt of 8.4 percent and an unlevered cost of capital of 14.6 percent. The firm's tax rate is 37 percent and the cost of equity is 18 percent. What is the firm's debt-equity ratio?

Respuesta :

Karabo99

Answer:

The firm's debt-equity ratio is 0.87

Explanation:

RE = 0.18 = 0.146 + (0.146 - 0.084)*D/E*(1 - 0.37)

0.18 -0.146 = 0.062*DE*0.63

0.034 = 0.03906*DE

D/E = 0.87

Therefore, The firm's debt-equity ratio is 0.87

Otras preguntas