Green and Red has a cost of equity of 11% and a pre-tax cost of debt of 8.5%. The firm's target weighted average cost of capital is 9% and its tax rate is 35%. What is the firm's target debt-equity ratio?
Answer
a. 62.03%
b. 48.29%
c. 51.13%
d. 55.72%
e. 57.55%