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Unformatted text preview: 1,907,357 $27.25 70,000 40% 1,086,957 1,630,435 $27.17 60,000 50% 1,315,789 1,315,789 $26.32 50,000 The optimal capital structure is for w d = 30%. This gives the highest corporate value, the lowest WACC, and the highest stock price per share. But notice that w d = 40% is very similar to the optimal solution; in other words, the optimal range is pretty flat....
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.
- Spring '08