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Question
Seduak 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 |
| 0% | - | 13.0% |
| 10 | 5.4% | 13.3 |
| 20 | 5.4 | 13.8 |
| 30 | 5.8 | 14.4 |
| 40 | 6.3 | 15.2 |
| 50 | 7.0 | 16.0 |
| 60 | 8.2 | 17.0 |
Based on these estimates, determine Seduak's optimal capital structure.
a. 30% debt
b. 40% debt
c. 50% debt
d. 60 % debt
Answer
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