Assume that you have just been hired as business manager STS. The Cost of Debt of STS with Different Capital Structures is shown in the table below Percent Financed with Debt (wd) Cost of Debt (rd) 0% 8.0% 10 8.0 20 8.1 30 8.5 40 9.0 50 11.0 60 14.0 The risk-free rate of return, rRF, is 6%, and the market risk premium, MRP, is 6%. Calculate the optimum capital Structure of STS. If we assume that the unlevered Beta of STS =1, calculate the cost of capital correspon

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To determine the optimum capital structure of STS we need to calculate the weighted average cost of ... View the full answer