Finally, you need to decide whether FVW$$s capital structure should be adjusted to improve its WACC.T he optimal capital structure provides the best trade$-$off between the tax benefits and the financial distress costs of debt. The table below expresses the financial distress costs of debt in terms of the impact of a firm$$s debt$-$to$-$capital ratio $($the ratio of debt to the sum of debt and equity$)$ on its EBITDA. Determine the optimal capital structure for FVW that maximises its firm value. You should begin by estimating FVW$$s WACC and free cash flow, for any given debt$-$to$-$ capital ratio. Next, you should estimate Australia$$s average annual GDP growth rate, which you may use as a proxy for the long$-$term growth rate for FVW$$s free cash flows. Finally, using FVW$$s free cash flow for a given debt$-$to$-$capital ratio, as well as the corresponding WACC and the long$-$term growth rate for FVW$$s free cash flows, you

can use the constant$-$growth perpetuity formula to estimate its firm value. The optimal debt$-$to$-$capital ratio maximises FVW$$s firm value$)]]$

Table$[[$F Fern Valley Wines Balance Sheet$],[($All amounts in $$000),2023],[$Cash$,4,477],[$Accounts receivable,$5,619],[$Inventory$,9,555],[$Other current assets,$473],[$Total current assets,$20,124],[$Inventory$,10,689],[$Property $,$ plant and equipment,$14,955],[$Right$-$of$-$use assets,$4,388],[$Agricultural assets,$327],[$Intangible assets,$12,988],[$Deferred tax assets,$1,641],[$Other non$-$current assets,$571],[$Total non$-$current assets,$45,559],[$Total assets,$65,683],[$Accounts payable,$7,489],[$Current tax liabilities,$850],[$Provisions$,760],[$Short$-$term loans,$1,098],[$Other current liabilities,$99],[$Total current liabilities,$10,296],[$Long$-$term debt,$15,009],[$Deferred tax liabilities,$3,424],[$Other non$-$current liabilities,$210],[$Total non$-$current liabilities,$18,643],[$Total liabilities,$28,939],[$Contributed equity,$34,912],[$Accumulated retained earnings,$1,832],[$Total equity,$36,744]]$