Understanding the optimal capital structure Review this sltuation: Transworld Consortium Corp. Is teying to identify its optimal capital structure. Transworid Consortium Corp. has gathered the following financial information to help with the analysis. Which capital structure shown in the preceding table is Transworld Consortium Corpis optimal capital structure? Debt ratio =7096; equity tatio =3096 Deht ratio =30%0 equity ratio =70% Debt ratio 40%; equity ratio =60% Debt ratio =60%;, equity ratio 40% Deht ratio 509; equily ratio 50 wi Consider this case: Giobex Corp. has a capital structure that consists of 40% debe and 60% equity. The firm's current beta is 1.25, but management wants to inderstand Globex Corn,'s market tisk without the effect of leverage, If Clobex Corp. has a 75% tax rote, what is its unlevered beta? 0.71 0.83 0.66 0,91 Now consider the case of another company: US Robotics Inc, has a current capital structure of 30% debt and 70% equity. Its current before-tax cost of debt is 10%, and its tax rato 15 25\%. It currently has a levered beta of 1.25. The risk-free rate is 3.5\%, and the risk premium on the market is 7%. US Robotics inc. Is considering changing its capital structure to 60% debt and 40% equity. Increasing the firm's level of debt will cause its before-tax cost. of debt to increase to 12%. First, folve for us Robotics Incis unlevered beta. Use us Robotics Incis untevered beta to solve for the firm's levered beto with the new capltal structure. Use Us Robotica Inc's lavered beta under the new copital structure, to solve for les cost of aquity under the new copital structure. What will the firm's weighted average cost of capital (WACC) be it it makes this change in its capital structure? 12,50% 8,13% 10.63% 750%