all part of the same question

4. Multinational cost of capital An MNC's cost of debt depends primarily on Suppose that: the opportunity cost of retained earnings for existing shareholders the opportunity cost for new shareholders the interest rate on borrowed funds .D - amount of firm debt ka-before-tax cost of firm debt I - corporate tax rate E- amount of firm equity .ke cost of firm equity Which of the following mathematical expressions represents the MNC's cost of capital? D OB) (1 - 0)+ (%) O (2) ke (1 - 1) +() ka Okt (1+)+(2) Oka (1 - 1)-) DE DE The following curve (in blue) depicts the trade-off between debt and the cost of capital. This trade-off is driven by the tax advantage of debt along with the increased likelihood of bankruptcy. Use the black point (cross symbol) to plot the point (on the blue curve) where the cost of capital is minimized. X Cost of Capital Debt Ratio