Determining the optimal capital structure

Understanding the optimal capital structure

Review this situation: Universal Exports Inc. is trying to identify its optimal capital structure. Universal Exports Inc, has gathered the following financial information to help with the analysis.

$\backslash$table$[[$Debt Ratio,Equity Ratio,EPS,DPS$,$Stock Price$],[30\%,70\%,1\mathrm{.}55,0\mathrm{.}34,22\mathrm{.}35],[40\%,60\%,1\mathrm{.}67,0\mathrm{.}45,24\mathrm{.}56],[50\%,50\%,1\mathrm{.}72,0\mathrm{.}51,25\mathrm{.}78],[60\%,40\%,1\mathrm{.}78,0\mathrm{.}57,27\mathrm{.}75],[70\%,30\%,1\mathrm{.}84,0\mathrm{.}62,26\mathrm{.}42]]$

Which capital structure shown in the preceding table is Universal Exports Inc.$\text{'}$s optimal capital structure?

Debt ratio $=50\%$; equity ratio $=50\%$

Debt ratio $=40\%$; equity ratio $=60\%$

Debt ratio $=30\%$; equity ratio $=70\%$

Debt ratio $=70\%$; equity ratio $=30\%$

Debt ratio $=60\%$; equity ratio $=40\%$

Globex Corp. has a capital structure that consists of $40\%$ debt and $60\%$ equity. The firm's current beta is $1\mathrm{.}25,$ but management wants to understand Globex Corp.$\text{'}$s market risk without the effect of leverage. $q,$

Consider this case:

$q,$

Globex Corp. has a capital structure that consists of $40\%$ debt and $60\%$ equity. The firm's current beta is $1\mathrm{.}25,$ but management wants to understand Globex Corp.$\text{'}$s market risk without the effect of leverage. $q,$

If Globex Corp. has a $25\%$ tax rate, what is its unlevered beta?

$0\mathrm{.}83$

$0\mathrm{.}87$

$0\mathrm{.}75$

$0\mathrm{.}79$