Please help with this assignment. I need the work asap thanks12/8/2012
Market risk premium
Fill in formulas in the yellow cells to find the optimum capital structure.
Debt/Value Equity/Value Debt/Equity A-T Cost of
WACC at optimum debt ratio =
Optimum debt ratio =
Reacher Technology 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 Reacher'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?
This question was answered on: May 23, 2022
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