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Pioneer Corporation is trying to determine its optimal capital structure. capital structure consists of debt and common stock. In order to estimate the cost of
Pioneer Corporation is trying to determine its optimal capital structure. capital structure consists of debt and common stock. In order to estimate the cost of debt. the company has produced the following table: is 4% and the market risk premium is 6%. Aaron estimates that if it had no debt its beti would be 1.0 . (Its "unlevered beta," bu, equals 1.0.) The company's tax rate, T. is 40% On the basis of this information, what is the company's optimal capital structure, and what is the irm's cost of capital at this optimal capital structure
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