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robby_anderson_2000

  • 3 years ago

Clinic has obtained the following estimates for its costs of debt and equity at various capital structures: Percent Debt After Tax Cost of Debt Cost of Equity 0 % - 16 % 20 6.6 % 17 40 7.8 19 60 10.2 22 80 14.0 27 What is the firm’s optimal capital Structure? (Hint: Calculate its corporate cost of capital at each structure. Also, note that data on component cost at alternative capital structure are not reliable in real world situation).

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