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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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