The firm is able to initially reduce the weighted average cost of capital with debt financing, but beyond Plan B the continued use of debt becomes unattractive and greatly increases the costs of the sources of financing. Traditional financial theory maintains that there is a U-shaped cost-of-capital curve relative to debt utilization by the firm, as illustrated in Figure 11-1. In this example, the optimum capital structure occurs at a 40 percent debt-to-assets ratio. Figure 11-1 Cost of capital curve Cost of capital (percent) Cost of equity Weighted average cost of capital U-shaped Cost of debt Minimum point for cost of capital 40 80 Debt-assets ratio (percent) Most firms are able to use 30 to 50 percent debt in their capital structure without exceeding norms acceptable to creditors and investors. Distinctions should be made, however, between firms that carry Page 351 high or low business risks. As discussed in Chapter 5, "Operating and Financial Leverage," a growth firm in a reasonably stable industry can afford to absorb more debt than its counterparts in cyclical industries. Examples of debt use by companies in various industries are presented in Table 11-4." Table 11-4 2015 long-term debt as a percentage of debt + equity (MV) 392