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Richmond Clinic has obtained the following estimates for its costs of debt and equity at various capital structures: After-Tax Percent Cost of Cost of debt
Richmond Clinic has obtained the following estimates for its costs of debt and equity at various capital structures: After-Tax Percent Cost of Cost of debt Debt Equity 0% na 14.56 20% 4.34 16.32 40% 5.02 20.63 60% 7.84 23.1 80% 11.28 27.82 What is the firm's optimal capital structure? (Hint: Calculate its corporate cost of capital at each structure. Also, note that data on component costs at alternative capital structures are not reliable in real-world situations.
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