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please help!! i need it in 20 minutes B D E G H 38 Problem: 13-2 39 40 PizzaPalace has consulted with investment bankers and
please help!! i need it in 20 minutes
B D E G H 38 Problem: 13-2 39 40 PizzaPalace has consulted with investment bankers and determined the interest rate it would pay for different 41 capital structures, as shown below. Data for the risk-free rate, the market risk premium, an estimate of 42 PizzaPalace's unlevered beta, and the tax rate are also shown below. Based on this information, what is the 43 firm's optimal capital structure and what is the weighted average cost of capital at the optimal structure? 44 45 46 Input Data 47 Before-tax Risk-free rate 5.0% 48 Percent Financed Cost Debt Market risk premium 5.5% 49 with Debt (w.) (rd) Unlevered beta 0.8 SO 0% 6.0% Tax rate 40.0% 51 20% 7.0% 52 40% 8.0% 53 60% 9.0% 54 80% 10.0% 55 56 Fill in formulas in the yellow cells to find the optimum capital structure. 57 Debt/Value Ratio 58 (w.) 0% 20% 40% 60% 80% Cual Din Build a Model Sheet1 80% 20% 4.00 55 56 Fill in formulas in the yellow cells to find the optimum capital structure. 57 Debt/Value Ratio 58 (wa) 0% 20% 40% 60% Equity Value Ratio 59 (w.) 100% 80% 60% 40% Debt/Equity 60 Ratio (w/w) 0.00 0.25 0.67 1.50 A-T Cost of 61 Debt (ra) Levered 62 Beta Cost of 63 Equity 64 WACC 65 66 67 68 WACC at optimum debt ratio = KOStep by Step Solution
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