The yield on $10-$year U$.$S$.$ Treasury notes stood at $2\mathrm{.}3\%$; the market risk premium remained around around its long$-$term historical estimate of $5\%$; Garmin's beta with respect to the S&P $500$ was $1\mathrm{.}2$; and the company faced the statutory corporate tax rate of $21\%.$

$1.$ What is Garmin's capital cost as the summer of $2019$ approaches?

$2.$ Calculate the missing numbers in the first panel $($Scenario $1)$ of Exhibit $2$ in the case, at each debt ratio shown, calculate the levered beta, cost of equity, and cost of capital. Comment on how the cost of capital evolves as the debt ratio increases.

$3.$ Calculate the missing numbers in the second panel $($Scenario $2)$ of Exhibit $2$ in the case; at each debt ratio shown, calculate the levered beta, cost of equity, and cost of capital. Comment on how the cost of capital evolves as the debt ratio increases.

$4.$ Calculate the missing numbers in the third panel $($Scenario $3)$ of Exhibit $2$ in the case, at each debt ratio shown, calculate the levered beta, cost of equity, and cost of capital. Comment on how the cost of capital evolves as the debt ratio increases.

$5.$ Given the information in scenario $3$ and your calculations, what would you advise Douglas Boessen, Garmin's CFO, to do about the company's capital structure before he leaves for vacation?

$6.$ Can you think of variables not considered in the analysis that may be relevant when determining an optimal capital structure?