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Please show working Company ABC has an optimal capital structure of 40% debt and 60% common equity. Assume that the debt break points occur at

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Company ABC has an optimal capital structure of 40% debt and 60% common equity. Assume that the debt break points occur at $36 million and $50 million, and that the common equity break point occurs at $45 million. The after tax cost of debt is 6%, 10%, and 14% as borrowing increases, and the cost of common equity is 15% if using retained earnings and 20% if using newly issued common stock. Prepare the marginal cost of capital schedule. Use the following information to determine the optimal capital budget for Company Z

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