ND THE OPTIMAL CAPITAL BUDGET a) The optimal capital structure is debt 30%, Preferred stock 20%, and common equity is 50% b) A maximum of $15 million of debe can be iswed at an after-tax cost of %. The firm's cost of debt goes up to 8%, if it wants to raise more than $15 million in debt. c) Cost of Pref Stock is 12% d) The cost of retained earnings is 18% and the cost of new common stock is 20% c) The amount available in related earnings is $15 million The firm has the following investment opportunities this year IRR 100