8. Ch. 12 Determining the optimal capital structure Review the following situation: Transworld Consortium Corp. is trying to identify its optimal capital structure. Transworld Consortium Corp. has gathered the following financial information to help with the analysis. Stock Price ($) Debt Ratio (%) 30 Equity Ratio (%) 70 EPS ($) 1.25 DPS ($) 0.55 36.25 40 60 1.40 0.60 37.75 50 50 1.60 0.65 39.50 60 40 1.85 0.75 38.75 70 30 1.75 0.70 38.25 Which capital structure shown in the preceding table is Transworld Consortium Corp.'s optimal capital structure? O Debt ratio = 60%; equity ratio = 40% O Debt ratio = 50%; equity ratio = 50% O Debt ratio = 70%; equity ratio = 30% O Debt ratio = 40%; equity ratio = 60% Axis Chemical Co. has found that its expected EPS is maximized at a debt ratio of 45%. Does this mean that Axis Chemical Co.'s optimal capital structure calls for 45% debt? O No O Yes