Question: how to calculate WACC Problem: Optimal Capital Structure at Cuthbert Damien Johns is the new CFO of Cuthbert Industries. The company has experienced a lot

how to calculate WACC Problem: Optimal Capital Structure at Cuthbert Damien

how to calculate WACC

Problem: Optimal Capital Structure at Cuthbert Damien Johns is the new CFO of Cuthbert Industries. The company has experienced a lot of variability in its capital structure and is uncertain what its optimal capital structure might be. Johns collected a sample of different capital structures over the last six years: ke Debt Ratio 21% 31% 43% 51% 62% 68% 11.32% 11.94% 12.45% 14.21% 16.34% 19.78% After-tax kd 5.47% 5.78% 6.19% 6.83% 7.91% 9.54% REQUIRED: 1. Estimate Cuthbert's optimal capital structure? Discuss any limitations with the approach

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