(Lecture 12 - Capital Structure) As the financial manager for your firm ABC Corp. you estimated the cost of debt and the cost of equity under different capital structures. Assume ABC faces a tax rate of 21%. Determine which of the following capital structure you should adopt. E.g., in capital structure 1, net debt/(net debt + equity) = 0%, equity/inet debt + equity) = 100%; in capital structure 2. net debt/(net debt + equity) = 20%, equity/(net debt + equity) = 80% Capital Structure 1 Net Debt 0% 20% 30% Equity 100% 80% 70% Cost of Debt 3% 4.6% 5.5% Cost of Equity 12% 14.2% 15.0% 18.0% 2 3 4 40% 60% 8.0% A 1 B.2 03 0.4