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Percent Financed with Debt (wd) Before-tax Cost Debt (rd) Additional Data Risk-free rate (RF) 2.30% Market risk premium 9.34% Unlevered beta (bu) 0.84 Tax rate (0) 21.0% (Link the tax rate) 0.0% 10.0% 18.5% 26.3% 33.3% 41.0% 50.0% 66.7% 0.00% 2.54% 3.36% 4.29% 5.98% 8.94% 10.65% 14.98% Using formulas, fill in the blank cells to find the optimum capital structure. Then use Excel functions to find the WACC at optimum debt ratio and the optimum debt ratio. WACC Debt/Value Equity/Value Ratio (wd) Ratio (ws) 0.00% 100.00% 10.00% 90.00% 18.50% 81.50% 26.31% 73.69% 33.30% 66.70% 41.00% 59.00% 50.00% 50.00% 66.70% 33.30% Debt/Equity After-tax Ratio (wdws) Cost of Debt| 0.00% 0.00% 11.11% 201% 22.70% 2.65% 35.71% 3.39% 49.93% 4.72% 69.49% 7.06% 100.00% 8.41% 200.30% 11.83% Levered Beta (L) 0.84 0.91 0.99 1.08 1.17 1.30 1.50 2.17 Cost of Equity (rs) 8.22% 8.73% 9.28% 9.88% 10.55% 11.46% 12.89% 17.58% 8.22% 8.02% 7.95% 7.99% 8.28% 9.05% 9.77% 12.09%
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