Calculate the optimal level of debt

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Considering the information in the table below, indicate which amount borrowed you believe to be the optimal level of debt and explain completely why. 

Amount Borrowed

Value of   Equity

Value of  the Firm

Stock Price

WACC

EPS

0

18,460

18,460

18.46

13.0%

2.40

$ 2 Million

17,320

19,320

19.32

12.42

2.55

$ 4 Million

15,830

19,830

19.83

12.10

2.70

$ 6 Million

14,020

20,020

20.03

11.99

2.54

$ 8 Million

16,570

24,570

24.57

11.50

3.04

$10 Million

12,000

22,000

22.00

12.00

3.20

NOTE: Value of the Firm is equal to the Amount Borrowed plus the Value of Equity

Reference no: EM133112104

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