Problem 22-10 O The financial manager has determined the following schedules for the cost of funds: Debt ratio 0% Cost of Debt Cost of Equity 5% 13% 5 5 13 10 5 13 15 5 13 20 5 15 25 7 17 30 10 19 a. Determine the firm's optimal capital structure. Round your answer to two decimal places. The optimal capital structure consists of 15 % debt resulting in the cost of capital equal to 11.8 % b. Construct a simple pro forma balance sheet that shows the firm's optimal combination of debt and equity for its current level of assets. Round your answers to the nearest dollar. Balance Sheet Assets $700 Debt $ 105 Equity 595 700 the cost of capital. c. An investment costs $400 and offers annual cash inflows of $133 for five years. Should the firm make the investment? Use Appendix D to answer the question. Round your answer to the nearest whole number. The investment should be made since the internal rate of return that is % exceeds d. If the firm makes this additional investment, how should its balance sheet appear? Round your answers to the nearest dollar. 20 Balance Sheet Assets $ Debt $ 1100 165 Equity 935 $ 1100 e. If the firm is operating with its optimal capital structure and a $400 asset yields 20.0 percent, what return will the stockholders earn on their investment in the asset? Round your answer to two decimal places. %