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each choice illustrates the relationship among debt / equity, rs, rd(1-T), and WACC for a specific capital structure of a firm. which is Combination is
each choice illustrates the relationship among debt / equity, rs, rd(1-T), and WACC for a specific capital structure of a firm. which is Combination is optimal?
Debt/Equity= 0%/100%, rs=12.00%, rd(1-T)=0, WACC= 12.00%
Debt/Equity= 25%/75%, rs=13.20%, rd(1-T)=5.4%, WACC= 11.25%
Debt/Equity= 50%/50%, rs=15.60%, rd(1-T)=8.4%, WACC= 12.00%
Debt/Equity= 37.5%/62.5%, rs=14.60%, rd(1-T)=6.9%, WACC= 11.44%
Debt/Equity= 12.5%/87.5%, rs=12.51%, rd(1-T)=4.8%, WACC= 11.55%
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