Question
Burleson Clinic has obtained the following estimates for its costs of debt and equity at various capital structures: Proportion of Debt After-Tax Cost of Debt
Burleson Clinic has obtained the following estimates for its costs of debt and equity at various capital structures: Proportion of Debt After-Tax Cost of Debt (%) Cost of Equity (%) 0% - 14.0 20% 6.2 15.0 40% 7.5 17.0 60% 9.8 20.0 80% 15.0 24.0 What is the firms optimal capital structure? (Hint: Complete the following table. When done, identified the optimal capital structure.) Proportion of Debt After-Tax Cost of Debt (%) Proportion of Equity Cost of Equity (%) Corporate Cost of Capital 0% - 14.0 20% 6.2 15.0 40% 7.5 17.0 60% 9.8 20.0 80% 15.0 24.0
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