a. Find the optimal capital structure (that is, optimal combination of debt and equity financing). Round your answers for the capital structure to the nearest whole number and for the cos of capital to one decimal place. The optimal capital structure: % debt and \% equity with a cost of capital of b. Why does the cost of capital initially decline as the firm substitutes debt for equity financing? The cost of capital initially declines because the firm cost of debt is than the cost of equity. c. Why will the cost of funds eventually rise as the firm becomes more leveraged? As the firm becomes more financially leveraged and riskier, the cosi d equity will d. Why is debt financing more common than financing with preferred stock? Debt financing is more common than financing with preferred stock because of preferred stock. which makes the cost of the debt financing | the cost of the e. If interest were not a tax-deductible expense, what effect would that have on the firm's cost of capital? If interest were not a tax deductible, the cost of debt would be the cost of capital. a. Find the optimal capital structure (that is, optimal combination of debt and equity financing). Round your answers for the capital structure to the nearest whole number and for the cost of capital to one decimal place. The optimal capital structure: % debt and % equity with a cost of capital of % b. Why does the cost of capital initially decline as the firm substitutes debt for equity financing? The cost of capital initially declines because the firm cost of debt is than the cost of equity. c. Why will the cost of funds eventually rise as the firm becomes more financially leveraged? As the firm becomes more financially leveraged and riskier, the cost of debt and equity will: d. Why is debt financing more common than financing with preferred stock? Debt financing is more common than financing with preferred stock because of preferred stock. which makes the cost of the debt financing the cost of the e. If interest were not a tax-deductible expense, what effect would that have on the firm's cost of capital? If interest were not a tax deductible, the cost of debt would be the cost of capital. imal capital structure (that is, optimal combination of debt and equity financing). Round your answers for the capital structure to the nearest whole nu one decimal place. capital structure: % debt and % equity with a cost of capital of % he cost of capital initially decline as the firm substitutes debt for equity financing? capital initially declines because the firm cost of debt is than the cost of equity. cost of funds eventually rise as the firm becomes more financially leveraged? becomes more financially leveraged and riskier, the cost of debt and equity will and cause the cost of capital to increase. financing more common than financing with preferred stock? ng is more common than financing with preferred stock because c which makes the cost of the debt financing ere not a tax-deductible expense, what effect would that have on iere not a tax deductible, the cost of debt would be declines because the firm cost of debt is than the cost of equity. eventually rise as the firm becomes more financially leveraged? financially leveraged and riskier, the cost of debt and equity will and cause the cost of capital to increase. e common than financing with preferred stock? nmon than financing with preferred stock because of which makes the cost of the debt financing deductible expense, what effect would that have on the firm's cost of capital? deductible, the cost of debt would be the cost of capital. As the firm becomes more financially leveraged and riskier, the cost of debt and equity will and cause the cost of capital to increase d. Why is debt financing more common than financing with preferred stock? Debt financing is more common than financing with preferred stock because of which makes the cost of the debt preferred stock. e. If interest were not a tax-deductible expense, what effect would that have on the firm's cost of capital? If interest were not a tax deductible, the cost of debt would be: the cost of capital. structure (that is, optimal combination of debt and equity financing). Round your answers for the capital struct place. ture: % debt and % equity with a cost of capital of % bital initially decline as the firm substitutes debt for equity financing? ly declines because the firm cost of debt is than the cost of equity. Is eventually rise as the firm becomes more financially leveraged? re financially leveraged and riskier, the cost of debt and equity will and cause the cost of capital to ore common than financing with preferred stock? ommon than financing with preferred stock because of which makes the cost of x-deductible expense, what effect would that have on the firm's cost of capital? x deductible, the cost of debt would be the cost of capital