Problem
Richmond Clinic has obtained the following estimates for its costs of debt and equity at various capital structures: Percent Debt After-Tax Cost of Debt Cost of Equity
|
Percent Debt
|
After-Tax Cost of Debt
|
Cost of Equity
|
|
0%
|
-
|
16%
|
|
.20
|
6.6
|
17
|
|
40
|
7.8
|
19
|
|
60
|
10.2
|
22
|
|
80
|
14.0
|
27
|
What is the firm's optimal capital structure?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.