mine (estimate) the optimal debt-to-equity ratio for Napoli Pizza, Seven Scenarios 1 - No debt 2 - 10% debt 3 - 20% debt 4 - 30% debt 5 - 40% debt 6-50% debt 7 -60% debt Amount Borrowed $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 Debt Rating BBB BBB BB B. CCC CC Debt Risk Premium 0.65% 0.65% 1.75% 2.75% 4.00% 5.00% 6.00% emium, Long-term Treasury bond rates are d. What will be the after-tax cost of debt under each scenario? Cost of Debt = (Treasury Bond Rate + Risk Premium) * (1 - Tax Rate) 5 7 6 2 3 4 Scenario After Tax Interest Rate 3.09% % % % % % % mine (estimate) the optimal debt-to-equity ratio for Napoli Pizza, Seven Scenarios 1 - No debt 2 - 10% debt 3 - 20% debt 4 - 30% debt 5 - 40% debt 6-50% debt 7 -60% debt Amount Borrowed $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 Debt Rating BBB BBB BB B. CCC CC Debt Risk Premium 0.65% 0.65% 1.75% 2.75% 4.00% 5.00% 6.00% emium, Long-term Treasury bond rates are d. What will be the after-tax cost of debt under each scenario? Cost of Debt = (Treasury Bond Rate + Risk Premium) * (1 - Tax Rate) 5 7 6 2 3 4 Scenario After Tax Interest Rate 3.09% % % % % % %