Phil's Carvings, Inc. wants to have a weighted average cost of capital of 10%. The firm has
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Question:
Phil's Carvings, Inc. wants to have a weighted average cost of capital of 10%. The firm has an after-tax cost of debt of 5% and a cost of equity of 11%. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?
1. Show formula for WACC (0.1 point)
2. Show all work to find We (0.2 point)
3. Present We (0.1 point)
4. Show all work and present Wd (0.1 point)
5. Show all work and present debt-equity ratio (0.2 point)
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