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Richmond Clinic has obtained the following estimates for its costs of debt and equity at various...

Richmond Clinic has obtained the following estimates for its costs of debt and equity at various capital structures:

After-Tax
Percent Cost of Cost of
Debt Debt 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 (lowest cost) capital structure? Please include an excel formula (if applicable).

A) What percent equity?

B) What percent debt?

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jeff jeffy answered 3 years ago
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