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Biotec has estimated the costs of debt and equity capital for various proportions of debt in its capital structure:

% of Debt Cost of Debt Cost of Equity

35 5.4% 13.8%

40 5.6 14.0

45 5.9 14.3

50 6.4 14.7


Based on these estimates, determine Biotec's optimal capital structure.

Basic Finance, Finance

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