13-2 OPTIMAL CAPITAL STRUCTURE 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: Terrell Trucking Company is in the process of setting its Debt/Capital Projected Projected Stock Ratio 20% 30 40 50 EPS $3.10 3.55 3.70 3.55 Price $34.25 36.00 35.50 34.00 Assuming that the firm uses only debt and common equity, what is Terrell's optimal capital structure? At what debt-to-capital ratio is the company's WACC minimized? RISK ANAL YSIS 3