How do i find the optimal capital structure?

I'm having trouble with a finance hw problem:
The info i have in the problem is a chart including the debt ratio, dividends per share, and cost of equity.

My choices for answers are the % of debt and % of equity. I think that i'm supposed to look at the highest number under cost of equity but i'm not sure. Any help would be great thanks.

Not the highest number for cost of equity. You want the lowest weighted average cost of capital. Since debt is always cheaper than equity, you may be inclined to go 100% debt 0% equity. However, as debt increases, so does bankruptcy risk, leading to an increase in the interest rate and cost of equity. You'll need to determine the tradeoff between greater debt loads and your bankruptcy risk. There are formulas that can help out with that.

Go to that information about that:
http://broker-valas.blogspot.com/
http://youbet-on-market.blogspot.com/

Tags

　　Easy Money 　　Easy Investing 　　Earn Money 　　Direct Investment 　　Debt Financing 　　Capital Investment 　　Business Investment 　　Business financing

Related information

Money makes you SAD/ANGRY/MEAN/HAPPY?>>>please read full article before answering!?

After one's basic needs (food, shelter, clothing, etc which reflect money or other assets) are met, other aspects of ones life may become more important than money in ones happiness. These ar...

Bad Credit getting back to Good Credit?

It's good that you want to address the problems you've had in the past with your credit, however when you negotiate, you open a whole another can of worms that might happen: 1. If you ...

Third Party Disclosure Violation?

You don't have the money to pay your car payment on time but you got funds to pay an attorney? You'd have to sue the lender in the county where they do business. The cost of filing suit...

Moving out on own?

When I rented I paid: Rent: $460 Health Insurance: $120 (mom helped, was in school) Car insurance: $80 Electric: $60-90 Water: Included w/ rent Cable: Didn't bother Internet: $30 (mom...

Im 24 from Scotland. I was declared bankrupt apprx 18 months ago and ran up around 拢6000 again, what can i do?

The most important thing is to stop gambling. I note you are in Scotland. (In England) it is an offence under insolvency laws to obtain credit without telling the creditor you are bankrupt. (In...

What comes first, building a nest egg or maxing out my 401k?

LightHeart advise seem good.

...

What's going on with Countrywide?

countrywide operates on several fronts. They buy mortgages made by other banks, like Firstmagnus, and pool them together with the loans that they make themselves. When everyone wanted a piece of ...

What does a credit card write off/charge off mean on a credit report?

Usually this happens if you haven't paid anything for 180 days. after the 180 days is when your card will charge off. what that means for you is that you will get an R9 on your credit report. ...