Question: Complete the tables below to identify the optimum capital structure for AZO Cost of Debt for Bond Ratings and Coverage Ratios Schedule of defualt risk


Complete the tables below to identify the optimum capital structure for AZO Cost of Debt for Bond Ratings and Coverage Ratios Schedule of defualt risk in terms of coverage ratio, bond rating, and spread over the risk free rate \begin{tabular}{|c|c|c|c|c|c|} \hline \begin{tabular}{l} Interest Coverage \\ Ratio greater than \end{tabular} & \begin{tabular}{c} Interest Coverage \\ Ratio less than or \\ equal to \end{tabular} & Rating & \begin{tabular}{c} Spread Over 10-year \\ Treasury Bond \\ \end{tabular} & & \\ \hline 12.5 & 100000 & Aaa/AAA & 0.69% & & \\ \hline 9.5 & 12.5 & Aa2/AA & 0.85% & \multicolumn{2}{|c|}{ Interest coverage = EBIT / Interest expense } \\ \hline 7.5 & 9.5 & A1/A+ & 1.07% & & \\ \hline 6.0 & 7.5 & A2/A & 1.18% & & \\ \hline 4.5 & 6.0 & A3/A- & 1.33% & & \\ \hline 4.0 & 4.5 & Baa2/BBB & 1.71% & & \\ \hline 3.5 & 4.0 & Ba1/BB+ & 2.31% & & \\ \hline 3.0 & 3.5 & Ba2/BB & 2.77% & & \\ \hline 2.5 & 3.0 & B1/B+ & 4.05% & & \\ \hline 2.0 & 2.5 & B2/B & 4.86% & & \\ \hline 1.5 & 2.0 & B3/B- & 5.94% & & \\ \hline 1.3 & 1.5 & Caa/CCC & 9.46% & & \\ \hline 0.8 & 1.2 & Ca2/CC & 9.97% & & \\ \hline 0.5 & 0.8 & C2/C & 13.09% & & \\ \hline-100000 & 0.5 & D2/D & 17.44% & & \\ \hline \end{tabular}
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