Question
The following table indicates the weight and cost of debt at different capital structure. Considering this capital structure, what is the lowest possible cost of
The following table indicates the weight and cost of debt at different capital structure. Considering this capital structure, what is the lowest possible cost of capital? You can assume 15% tax rate and the 20% cost of unlevered equity.
| Capital Structure | Weight of Debt | Cost of Debt |
| A | 10% | 4% |
| B | 20% | 6% |
| C | 40% | 9% |
| D | 60% | 12% |
| E | 80% | 15% |
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Public Finance
Authors: Steven G. Medema, Carl Sumner Shoup
1st Edition
0202307859, 978-0202307855
