Question
Omni Corporation has a target capital structure of 60% equity and 40% debt. The schedule of financing costs for the Omni Corporation is shown in
Omni Corporation has a target capital structure of 60% equity and 40% debt. The schedule of financing costs for the Omni Corporation is shown in the figure below.
Schedule for capital costs for Omni amount of new debt in the millions after-tax cost of debt amount of new equity in million costs of equity 0 to 994.2%0 to 1996.5% 100 to 1994.6%200 to 3998.0% 200 to 2995.0%400 to 5999.5%
Calculate the breakpoints for Omni Corporation and graph the marginal cost of the capital schedule.
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