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Complete the following table and determine the firms optimal capital structure. Assume that the firm has a 40% tax rate, the risk-free rate (rf) is

Complete the following table and determine the firms optimal capital structure. Assume that the firm has a 40% tax rate, the risk-free rate (rf) is 4% and the market risk premium (rm-rf) is 8%.

what is the optimal capital structure

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Beta 1.0 WACC Wd We rd Re 0% 75% 65% 5.5% 7% 11% 50%

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