Calculate its corporate cost of capital at each structure


Richmond Clinic has obtained the following estimates for its costs of debts and equity at various capital structures: Percent Debt After-Tax Cost of Debt Cost of Equity 0% -- 16.0% 20% 6.6% 17.0% 40% 7.8% 19.0% 60% 10.2% 22.0% 80% 14.0% 27.0% 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 the real-world situations.)

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Finance Basics: Calculate its corporate cost of capital at each structure
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