Corporate Finance: Instructor\'s Manual Applied Corporate Finance

Aswath Damodaran 318

WACC and Debt Ratios

Weighted Average Cost of Capital and Debt Ratios

Debt Ratio

W

AC

C

9. 40 %

9. 60 %

9. 80 %

10. 00 %

10. 20 %

10. 40 %

10. 60 %

10. 80 %

11. 00 %

11. 20 %

11. 40 %

0

10

% 20 %

30

%

40

%

50

%

60

%

70

%

80

%

90

%

10

0 %

The same results are presented here in a graphical format.

In the Miller-Modigliani world, this would be a flat line.