14-2 OPTIMAL CAPITAL STRUCTURE Jackson Trucking Company is in the process of setting its target capital structure. The CFO believes that the optimal debt-to-capital ratio is some- where between 20% and 50%, and her staff has compiled the following projections for EPS and the stock price at various debt levels: 30 Debt/Capital Projected Projected Stock Ratio EPS Price 20% $3.20 $35.00 3.45 36.50 3.75 36.25 3.50 35.50 Assuming that the firm uses only debt and common equity, what is Jackson's optimal capital structure? At what debt-to-capital ratio is the company's WACC minimized? 40