Optimal capital structure Hawaiian Macadamia Nut Company has collected the following data with… 1 answer below »


Optimal important make Hawaiian Macadamia Nut Company has self-possessed the forthcoming axioms delay deference to its important make, expected hues per distribute, and required revert.

Capital make

Expected hues

Required

debt ratio

per distribute

return, ks

0%

$3.12

13%

10

3.90

15

20

4.80

16

30

5.44

17

40

5.51

19

50

5.00

20

60

4.40

22

a. Compute the estimated distribute rate associated delay each of the important makes, using the simplified mode described in this chapter (see Equation 12.12).

b. Determine the optimal important make on the basis of (1) maximization of expected hues per distribute and (2) maximization of distribute rate.

c. Which important make do you approve? Why?

Equation 12.12

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