What is cost of capital at marquez optimal capital structure

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Reference no: EM13929966

An investment banking firm has estimated the following after-tax cost of debt and cost of equity for Marquez Luxury Travel Tours.

Proportion of Debt After-tax Cost of Debt Cost of Equity

30% 3.5% 10.5%

40% 3.8% 11.3%

50% 5.0% 12.9%

60% 7.2% 14.5%

What is the cost of capital at Marquez’ optimal capital structure given the above information?

8.95%

8.40%

8.30%

8.15%

Reference no: EM13929966

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