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robby_anderson_2000
 2 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).
robby_anderson_2000
 2 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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