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Question
Biotec has estimated the costs of debt and equity capital for various proportions of debt in its capital structure:| % of Debt | Cost of Debt | Cost of Equity |
| 35 | 5.4% | 13.8% |
| 40 | 5.6 | 14.0 |
| 45 | 5.9 | 14.3 |
| 50 | 6.4 | 14.7 |
Based on these estimates, determine Biotec's optimal capital structure.
a. 35% debt
b. 40% debt
c. 45% debt
d. 50% debt
Answer
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