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Omni corporation has a target capital structure of 60% equity and 40% debt. The schedule of financing cost for the Omni corporation is shown in
Omni corporation has a target capital structure of 60% equity and 40% debt. The schedule of financing cost for the Omni corporation is shown in the figure below.
schedule for capital costs for Omni
amount of new debt in millions after tax cost of debt amount of new equity in millions cost of equity
0 to 99 4.2% 0 to 199 6.5%
100 to 199 4.6% 200 to 399 8.0%
200 to 299 5.0% 400 to 599 9.5%
calculate the break points for Omni corporation and graph the marginal cost of capital schedule.
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