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Author Question: Optimal capital structure, or debt capacity, is the debt-equity mix that minimizes the cost of the ... (Read 324 times)

s.tung

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on: Jul 11, 2018
Optimal capital structure, or debt capacity, is the debt-equity mix that minimizes the cost of the firm's debt.
 
  Indicate whether the statement is true or false

Question 2

Given the anticipated rate of inflation (i) of 1.7 and the real rate of interest (R) of 1.4, find the nominal rate of
  interest (r).
 
  What will be an ideal response?


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poopface

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Reply #1 on: Jul 11, 2018
Answer to Question 1

FALSE

Answer to Question 2

r = R + i + Ri
r = .014 + .017 + (.014 )(.017 )
r = .031 + .000238 = .031238
r = 3.12


s.tung

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Reply 2 on: Jul 11, 2018
Thanks for the timely response, appreciate it

Liddy

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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