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Unformatted text preview: 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? Percent Financed with Debt (w d ) Before-tax Cost Debt (rd) Ratio (w d ) Ratio (w s ) Ratio (w d /w s ) Debt (r d )...
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- Spring '11