o C The financial manager has determined the following schedules for the cost of funds: Debt ratio Cost of Debt Cost of Equity 0% 6% 14% 10 6 14 20 6 14 30 6 14 40 6 16 50 60 7 9 18 20 a. Determine the firm's optimal capital structure. Round your answer to two decimal places. The optimal capital structure consists of 30 % debt resulting in the cost of capital equal to 30 %. b. Construct a simple pro forma balance sheet that shows the firm's optimal combination of debt and equity for its current level of assets. Round your answers to the nearest dollar. Balance Sheet Assets $700 Debt Equity $ 210 490 700 That's Correct c. An investment costs $500 and om Round your answer to the nearest whole number. of $108 for six years. Should the firm make the investment? Use Appendix D to answer the question. be made since the internal rate of return that is % is lower than The investment should not + d. If the firm makes this additional investment, how should its balance sheet appear? Round your answers to the nearest dollar. the cost of capital. Assets Balance Sheet Debt Equity $ x e. If the firm is operating with its optimal capital structure and a $500 asset yields 20.0 percent, what return will the stockholders earn on their investment in the asset? Round your answer to two decimal places. 21.6 %