*** Must use EXCEL spreadsheet and show formulas***

Richmond Clinic has obtained the following estimates for its costs of debt and equity at various capital structures:

Percent debt -------After-tax Cost of Debt --------Cost of equity

0% --------------------------___-------------------------------- 16%

20---------------------------- 6.6% ----------------------------17.0

40---------------------------- 7.8 -------------------------------19.0

60--------------------------- 10.2 ------------------------------22.0

80 ---------------------------14.0------------------------------- 27.0

What is the firms optimal capital structure? (Hint: Calculate its corporate cost of capital at each structure. Also, note that data on component costs at alternative capital structures are not reliable in real-world situations