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10% 0.90 20% Debt ratio Pre-tax cost of debt Levered beta 5.00% 5.25% 0.95 30% 5.30% 1.10 40% 7.00% 2.00 50% 9.00% 60% 11.00% 4.00

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10% 0.90 20% Debt ratio Pre-tax cost of debt Levered beta 5.00% 5.25% 0.95 30% 5.30% 1.10 40% 7.00% 2.00 50% 9.00% 60% 11.00% 4.00 Risk-free mate Market ox premium tax rate You've collected the above info about a firm. Use it to set up a capital structure table similar to the homework problem. Find the WACC at each debt ratio and state which debt ratio is optimal

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