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9. Determining the optimal capital structure Aa Aa Understanding the optimal capital structure Review this situation: Transworld Consortium Corp. is trying to identify its optimal
9. Determining the optimal capital structure Aa Aa Understanding the optimal capital structure Review this situation: Transworld Consortium Corp. is trying to identify its optimal capital structure. Transworld Consortium Corp. has gathered the following financial information to help with the analysis. Debt Ratio Equity Ratio EPS DPS Stock Price 30% 40% 50 60% 70% 70% 60% 50% 40% 30% 1.25 0.55 36.25 1.40 0.60 37.75 1.60 0.65 39.50 1.85 0.7538.75 1.75 0.70 38.25 which capital structure shown in the preceding table is Transworld Consortium Corp.'s optimal capital structure? Debt ratio-50%, equity ratio-50% Debt ratio-40%, equity ratio-60% Debt ratio-60%, equity ratio-40% o Debt ratio-30%, equity ratio-70% Debt ratio-70%, equity ratio-30% Consider this case: Globo-Chem Co. has a capital st cture that consists of 40% debt and 60% equity. The firm's current beta is 1.25 but management wants to understand Globo-Chem Co.'s market risk without the effect of leverage. If Globo-Chem Co. has a 45% tax rate, what is its unlevered beta? O 0.96 O 0.91 O 1.05 0.73
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