What is cost of capital at marquez optimal capital structure

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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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