Question: Travis Corporation has planned to implement a capital structure. The finance manager proposes that the optimal debt/equity ratio is between 30% and 60%. The task

Travis Corporation has planned to implement a capital structure. The finance manager proposes that the optimal debt/equity ratio is between 30% and 60%. The task force has identified the following earnings per share (EPS) projections , as well as the price of shares at different levels of debt. debt capital ratio: 30%, 40%, 50%, 60%, projected Eps: 3.7, 3.85, 3.90, 3.85. Projected Stock Price 52.5, 55, 54.1, 52.

Calculate the optimal capital structure assuming that Travis Corporation uses only debt and common stock.

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