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Integrativelong dashOptimal capital structureMedallion Cooling Systems, has total assets of $ 9 comma 800 comma 000$9,800,000, EBIT of $ 2 comma 000 comma 000$2,000,000, and

Integrativelong dashOptimal

capital structureMedallion Cooling Systems, has total assets of

$ 9 comma 800 comma 000$9,800,000,

EBIT of

$ 2 comma 000 comma 000$2,000,000,

and preferred dividends of

$ 197 comma 000$197,000

and is taxed at a rate of

40 %40%.

In an effort to determine the optimal capital structure, the firm has assembled data on the cost of debt, the number of shares of common stock for various levels of indebtedness, and the overall required return on investment:

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