We present here an analytical process for generating the firm's value [FV] and the weighted-average cost of capital [WACC] curves,
with intent to locate the optimal capital structure. The method takes into consideration the relationship between debt, equity and taxes,
and places emphasis on the effects of default risk, as well as on the assumptions that underlie the curves. In relation to the proposed
approach, it is shown that the conventional one, which is more commonly used in practice, is flawed.
