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Mrs . Lovett's Meat Pies Inc. has consulted with investment bankers and determined the interest rate it would pay for different capital structures, as shown
Mrs Lovett's Meat Pies Inc. has consulted with investment bankers and determined the interest rate it would pay for different
capital structures, as shown below. Data for the riskfree rate, the market risk premium, an estimate of Mrs Lovett's unlevered
beta, and the tax rate are also shown below. Based on this information, what is the firm's optimal capital structure and what is
the weighted average cost of capital at the optimal structure?
Fill in formulas in the yellow cells to find the optimum capital structure.
WACC at optimum debt ratio
Optimum debt ratio
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