4. Determining the optimal capital structure Review the following 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. Debt Ratio (%) ra% WACC (%) Equity Ratio (%) 10.50 8.61 30 70 7.00 40 60 7.20 10.80 8.21 50 50 7.70 11.40 8.01 60 40 8.90 12.20 8.08 70 30 10.30 13.50 8.38 Which capital structure shown in the preceding table is Universal Exports Inc.'s optimal capital structure? Debt ratio = 30%; equity ratio 70% Debt ratio = 70%; equity ratio 30% Debt ratio = 60%; equity ratio 40% Debt ratio 40%; equity ratio 60% Debt ratio = 50%; equity ratio 50% Axis Chemical Co. has found that its expected EPS is maximized at a debt ratio of 45%. Does this mean that Axis Chemical Co.'s optimal capital structure calls for 45% debt? Yes No