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Category > Business & Finance Posted 09 Dec 2017 My Price 10.00

Terrell's optimal capital structure

Terrell Trucking Company is in the process of setting its target capital structure. The CFO believes that the optimal debt-to-capital ratio is somewhere between 20% and 50%, and her staff has compiled the following projections for EPS and the stock price at various debt levels:

Debt/Capital Ratio Projected EPS Projected Stock Price
            20% $3.10         $32.75            
            30 3.45         35.75            
            40 3.75         36.00            
            50 3.55         32.25            

Assuming that the firm uses only debt and common equity, what is Terrell's optimal capital structure? Round your answers to two decimal places.

% debt
% equity

At what debt-to-capital ratio is the company's WACC minimized? Round your answer to two decimal places.

%

 

Answers

CourseLover
(12)
Status NEW Posted 09 Dec 2017 07:12 AM My Price 10.00

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