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

8. Optimal capital structure Jackson Trucking Company is in the process of setting its target capital structure. The CFO believes the optimal debt ratio is somewhere between 20 and 50 percent, and her staff has compiled the following projections for EPS and the stock price at various debt levels: Assuming that the firm uses only debt and common equity, what is Jackson's optimal capital structure? At what debt ratio is the company's WACC minimized