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A5Q5 Explain the static theory of capital structure using the graph below. Describe the meaning of each term (Ru, RE, WACC, Rox(1-Te), and D*/E*) on

A5Q5

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Explain the static theory of capital structure using the graph below. Describe the meaning of each term (Ru, RE, WACC, Rox(1-Te), and D*/E*) on the graph below. Cost of capital Re Ru WACC Minim um cost of capital (WACC") Debt-equity ratio D"/E D/E Optimal debt- equity ratio

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