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b) A company wants to have an option mix of debt and equity. The cost of debt and equity at a different debt equity ratio
b) A company wants to have an option mix of debt and equity. The cost of debt and equity at a different debt equity ratio is as follows. [10] \begin{tabular}{|c|c|c|} \hline Debt equity ratio & Cost of debt \% (post-Tax) & Cost of equity \% \\ \hline 0:100 & - & 12.5 \\ \hline 10:90 & 5 & 13.00 \\ \hline 20:80 & 5 & 13.60 \\ \hline 30:70 & 6 & 14.30 \\ \hline 40:60 & 7 & 16.00 \\ \hline 5050 & 8 & 18.00 \\ \hline 6040 & 10 & 20.00 \\ \hline \end{tabular} What is the optimum capital structure of the company? Calculate combined cost of capital. b) A company wants to have an option mix of debt and equity. The cost of debt and equity at a different debt equity ratio is as follows. [10] \begin{tabular}{|c|c|c|} \hline Debt equity ratio & Cost of debt \% (post-Tax) & Cost of equity \% \\ \hline 0:100 & - & 12.5 \\ \hline 10:90 & 5 & 13.00 \\ \hline 20:80 & 5 & 13.60 \\ \hline 30:70 & 6 & 14.30 \\ \hline 40:60 & 7 & 16.00 \\ \hline 5050 & 8 & 18.00 \\ \hline 6040 & 10 & 20.00 \\ \hline \end{tabular} What is the optimum capital structure of the company? Calculate combined cost of capital
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