Determine the optimal capital structure

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Given the following information, what would be the optimal capital structure if the firm's growth rate were 2%?

DEBT RATIO EXPECTED DIVIDENDS COST OF EQUITY 

0% $5.00 11%

25% $6.00 12%

40% $6.50 13%

50% $7.00 14%

75% $7.50 15%

0% debt, 100% equity

25% debt, 75% equity

50% debt, 50% equity

75% debt, 25% equity

Reference no: EM133074667

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