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Question 9 (5 points) Each answer choice illustrates the relationship among Debt/Equity, rs, rd(1-T), and WACC for a specific capital structure of a firm. Which
Question 9 (5 points) Each answer choice illustrates the relationship among Debt/Equity, rs, rd(1-T), and WACC for a specific capital structure of a firm. Which Debt/Equity combination is the optimal capital structure of this firm? (Multiple Choice) Debt/Equity = 25%/75%, rs = 13.20%, rd(1-T) = 5.40%, WACC = 11.25% Debt/Equity = 12.5%/87.5%, rs = 12.51%, rd(1-T) = 4.80%, WACC = 11.55% Debt/Equity = 0%/100%, rs = 12.00%, rd(1-T) = 0, WACC = 12.00% Debt/Equity = 50%/50%, rs = 15.60%, rd(1-T) = 8.40%, WACC = 12.00% Debt/Equity = 37.5%/62.5%, rs = 14.16%, rd(1-T) = 6.90%, WACC = 11.44%
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