Take Home Portion of Exam $1$ for FIN$-3015-01$

To be submitted prior to the start of the $"$in$-$class" portion of the exam.

Mrs$.$ Lovett's Meat Pies Inc. has consulted with investment bankers and determined the interest rate it would pay for different capital

structures, as shown below. Data for the risk$-$free rate, the market risk premium, an estimate of Mrs$.$ Lovett's unlevered beta, and the

tax rate are also shown below. Based on this information, what is the firm's optimal capital structure and what is the weighted

average cost of capital at the optimal structure?

Fill in formulas in the yellow cells to find the optimum capital structure.