Terrell Trucking Company is in the process of setting its target capital structure. The CFO believes that
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Question:
Terrell Trucking Company is in the process of setting its target capital structure. The CFO believes that the optimal debttocapital ratio is somewhere between and and her staff has compiled the following projections for EPS and the stock price at various debt levels:
DebtCapital Ratio Projected EPS Projected Stock Price
$ $
Assuming that the firm uses only debt and common equity, what is Terrell's optimal capital structure? Choose from the options provided above. Round your answers to two decimal places.
debt
equity
At what debttocapital ratio is the company's WACC minimized? Choose from the options provided above. Round your answer to two decimal places.
Related Book For
Fundamentals of Financial Management
ISBN: 978-1337395250
15th edition
Authors: Eugene F. Brigham, Joel F. Houston
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