Please see attached for more details.
Use a spreadsheet to calculate the cost of debt, cost of equity (using CAPM), and weighted marginal cost of capital for each level of debt shown above. Use Excel to construct a graph of these three lines, then copy and past it into your written analysis.
Use the data and the graph to decide whether the company's capital structure at the end of 2011 is appropriate (as recommended by the Trade-off Theory). If not, which changes would you recommend? (For this task, ignore the new financing needed for 2012; we want to finance the company in the most appropriate manner immediately)© BrainMass Inc. brainmass.com October 10, 2019, 4:25 am ad1c9bdddf
Cost of Debt, Cost of Equity
How do you calculate the cost of debt and cost of equity if you are only given the beta, debt/equity proportion, and the after tax interest rate? Please see attached for more details.
Please find the solution attached.
This solution helps in estimating Cost of Debt, Cost of Equity.