Question

2. By the Judicious use of the following estimates of the after tax cost of debt and costo
equity capital at different levels of debt-equity mix in the capital structure of a company
ascertain the level at which the capital structure of the company will be at its optimum
Debt as % of Total
Capital Employed
0
10
20
30
40
50
60

cost of debt
(%)
6
6
6
7
8
9
10

cost of equity(%)
10
10
11
12
14
16
20

Answer 1

Answer:

......................................

Answer 2

Answer:

Above answer is right...