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Can you please show the formulas so i know how to do it?? thanks! Ocean Technology has consulted with investment bankers and determined the interest
Can you please show the formulas so i know how to do it?? thanks!
Ocean Technology has consulted with investment bankers and determined the interest rate it would pay for different capital structures, as shown below. Data for the risk-free rate, the market risk premium, an estimate of Ocean's unlevered beta, and the tax rate are also shown below. Based on this information, what is the firm's optimal capital structure and what is the weighted average cost of capital at the optimal structure? Input Data Risk-free rate Market risk premium Unlevered beta Tax Rate 3.2500% 6.5000% 1.95 22.000% 4Percent Financed with Before-tax 6 Debt (w Cost Debt (rd 3.00% 0.0 0.2 0.3 0.4 0.5 0.6 0.7 3.90% 4.50% 14.50% 6 Fill in formulas in the yellow cells to find the optimum capital structure Debt/ValueEquity/Value Debt/Equity A-T Cost of LeveredCost of 9Ratio (Wd) 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Ratio (w) Ratio ( waDebt (r Beta Equit WACC 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 WACC at optimum debt ratio Optimum debt ratio
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