Question: Fama's Llamas has a weighted average cost of capital of 10 percent. The company's cost of equity is 17.5 percent, and its pretax cost of

Fama's Llamas has a weighted average cost of capital of 10 percent. The company's cost of equity is 17.5 percent, and its pretax cost of debt is 8.5 percent. The tax rate is 32 percent. What is the company's target debt-equity ratio?

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