% Financed with Debt 0%- EBIT. - Last year's EBIT Shares Outstanding (n.) - P. = stock price T = Tax rate Er = risk-free rate RP = market risk premium I. - cost of equity Equity Beta. p = $6.000.000 600,000 $60.00 25.07 4.07 6.00% 11.80% 1.30 20% 30% 40% 50% 0.07 7.0% 7.5% 9.0% 11.5% A 16 points OPTIMAL DEBT LEVEL Calculate the cost of Equity at each debt level. va DIS Equit, Beta = B. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 07 20% 30% 40% 50% Free cash flow (FCF) - VACC Y 0% 20% 30% 40% 50% % Financed with Debt 0%- EBIT. - Last year's EBIT Shares Outstanding (n.) - P. = stock price T = Tax rate Er = risk-free rate RP = market risk premium I. - cost of equity Equity Beta. p = $6.000.000 600,000 $60.00 25.07 4.07 6.00% 11.80% 1.30 20% 30% 40% 50% 0.07 7.0% 7.5% 9.0% 11.5% A 16 points OPTIMAL DEBT LEVEL Calculate the cost of Equity at each debt level. va DIS Equit, Beta = B. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 07 20% 30% 40% 50% Free cash flow (FCF) - VACC Y 0% 20% 30% 40% 50%