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Pls help. DETERMINING THE OPTIMAL CAPITAL STRUCTURE Zeta, Inc. expects EBIT of 4,000 usd and a marginal tax rate of 40%. The required rate of

Pls help.

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DETERMINING THE OPTIMAL CAPITAL STRUCTURE Zeta, Inc. expects EBIT of 4,000 usd and a marginal tax rate of 40%. The required rate of return by stockholders is 12%, while the market value of the shares is $20. There is l thousand shares outstanding. Determine the optimal capital structure for the company using the discounted cash flows technique and considering the different scenarios of debt levels D/V WACC 12% Debt kd ks $20,000 S20,000S$20 0% 2,000 4,000 6,000 8,000 0 | 12% 8% | 12.2% 8.3%| 12.6% 9% | 13.2% 10% | 14% $10,000 | 12%| 15.2% S = [EBIT _kdD)(1-T)]/ks v EBIT(1-T)/WACC company's value S-Company's common equity value D-Company's debt value

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