considering replacing half of it with debt. The next example will focus on identifying the optimal capital structure, and the following information may be useful Assume Lower Depot's has a market value of equity equal to $16.07 billion, in addition to $2.0 billion of debt. If EBITD 512799 bilion and the fim's debt rating is A, how can the unlevered value of a fim be estimated? Based on historical data, A rated firms have a 10.year default probability of 0.66% and a loss given default of 25% of firm value. Assume a 21% tax rate. Optimal Capital Structure \begin{tabular}{l|c|} \hline EBITDA & $1,279,900,000 \\ \hline Debt Rating & A \\ \hline Market Value of Equity & \\ \hline Value of Corporate Deb & $2,000,000,000 \end{tabular} Current Value of Firm Corporate Tax Rate 21% Tax Shield Value: Default Probability Defalt Loss Percentage 25% Default Loss Value Cost of Diatrean Observed Firm Value A. PV of Tax Shields Distress Costs Unlevered Firm Value Risk Free Rate: 2.80% considering replacing half of it with debt. The next example will focus on identifying the optimal capital structure, and the following information may be useful Assume Lower Depot's has a market value of equity equal to $16.07 billion, in addition to $2.0 billion of debt. If EBITD 512799 bilion and the fim's debt rating is A, how can the unlevered value of a fim be estimated? Based on historical data, A rated firms have a 10.year default probability of 0.66% and a loss given default of 25% of firm value. Assume a 21% tax rate. Optimal Capital Structure \begin{tabular}{l|c|} \hline EBITDA & $1,279,900,000 \\ \hline Debt Rating & A \\ \hline Market Value of Equity & \\ \hline Value of Corporate Deb & $2,000,000,000 \end{tabular} Current Value of Firm Corporate Tax Rate 21% Tax Shield Value: Default Probability Defalt Loss Percentage 25% Default Loss Value Cost of Diatrean Observed Firm Value A. PV of Tax Shields Distress Costs Unlevered Firm Value Risk Free Rate: 2.80%