Question: How would you approach this assignment? I calculated WACC but I don't know how I would use this to find the optimal debt ratio of

How would you approach this assignment? I calculated WACC but I don't know how I would use this to find the optimal debt ratio of a firm

Optimal Capital Structure a. Based upon the cost of capital approach, what is the optimal debt ratio for your firm? b. Bringing in reasonable constraints into the decision process, what would your recommended debt ratio be for this firm? c. Does your firm have too much or too little debt i. relative to the sector? ii. relative to the market? Things to look at: Earnings Variance by Industry Market Debt Ratio Regression

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