This document discusses issues with using a target debt-to-value ratio to calculate the weighted average cost of capital (WACC). It provides an example where using a 50% debt and 50% equity ratio results in a positive net present value, but does not make logical sense. Specifically, maintaining the target ratios would require the company to borrow debt and then distribute some of it directly to equity holders, which creditors would not allow. The document cautions analysts to carefully consider whether their assumed debt-to-equity ratios in WACC calculations are realistic.