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Richmond Clinic has obtained the following estimates for its costs of debt and equity at various capital structures: Percent Debt After-Tax Cost of Debt Cost
Richmond Clinic has obtained the following estimates for its costs of debt and equity at various capital structures:
Percent Debt | After-Tax Cost of Debt | Cost of Equity |
0% | ----- | 16% |
20% | 6.6% | 17% |
40% | 7.8% | 19% |
60% | 10.2% | 22% |
80% | 14.0% | 27% |
What is the firms optimal capital structure? (Calculate its corporate cost of capital at each structure)
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