Question: E. Estimate D*: Compute the optimal net debt level (D*) for the end of 1981. This is the highest level of net debt that is

E. Estimate D*: Compute the optimal net debt level (D*) for
the end of 1981. This is the highest level of net debt

E. Estimate D*: Compute the optimal net debt level (D*) for the end of 1981. This is the highest level of net debt that is consistent with your answer from 3D. Assume the cost of borrowing (no) going forward at the new capital structure will be 18.2% (i .e. do not use the 14% given in Exhibit 4). We'll discuss the reasonableness of this assumption in class

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