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A firm has a 50% debt, 50% equity optimal capital structure. Recent economic reports suggest that inflation is picking up in the economy, and the

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A firm has a 50% debt, 50% equity optimal capital structure. Recent economic reports suggest that inflation is picking up in the economy, and the Federal Reserve has announced that it will take the appropriate steps to lower inflation. Which of the following is likely the firm's new capital structure after adjustment, if any, to the Fed's announcement? 60% debt; 40% equity 40% debt: 60% equity Can't be determined without knowing the firm's WACC 50% debt; 50% equity

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