Question: Please help! Will upvote, thank you!!! Problem 15-11 WAck and Optimal Capital Structure F. Pierce Products Ine, is considering changing its capital structure. F. Pierce
Problem 15-11 WAck and Optimal Capital Structure F. Pierce Products Ine, is considering changing its capital structure. F. Pierce currently has no debt and no preferred stock, but it would like to add some debt to take advantage of low interest rates and the tax shleld. Its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows: F. Pratce uses the capM to estimate its cost of common equity, rs and at the time of the analaysis the risk-free rate is 496, the market risk premium is zo\%, and the company's tax rate is 40%. F. Plerce estimates that its beta now (which is funlevered because it currently has no debt) is 1.35 . Based on this information, What is the firmes optirial capital structure, and what would be the welighted average cost of capital at the opeimat capital structure? bo not round intermediate calculations. Round your answers to two decimal places. BEBT EQurY WACC
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