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please show excel formulas Reacher Technology has consulted with investment bankers and determined the interest rate it would pay fo different capital structures, as shown
please show excel formulas
Reacher Technology has consulted with investment bankers and determined the interest rate it would pay fo different capital structures, as shown below. Data for the risk-free rate, the market risk premium, an estimate Reacher's unlevered beta, and the tax rate are also shown below. Based on this information, what is the firm 2 optimal capital structure and what is the weighted average cost of capital at the optimal structure? B 5 5 Input Data Risk-free rate Market risk premium Unlevered beta Tax rate 4.5% 5.5% 0.8 40.0% 3 1 2 3 Percent Financed with Debt (wa) 0% 10% 20% 30% 40% 50% 60% Before-tax Cost Debt (rd) 6.0% 6.1% 7.0% 8.0% 10.0% 12.5% 15.5% 18.0% 5 5 7 70% Fill in formulas in the yellow cells to find the optimum capital structure. Levered Beta Cost of Equity WACC 2 3 1 5 5 7 3 Debt/Value Ratio (wa) 0% 10% 20% 30% 40% 50% 60% 70% Equity/Value Debt/Equity A-T Cost of Ratio (ws) Ratio (Wa/ws) Debt (ra) 1.0 0.00 0.9 0.11 0.8 0.25 0.7 0.43 0.6 0.67 0.5 1.00 0.4 1.50 0.3 2.33Step by Step Solution
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