Debt Ratio Equity Ratio EPS DPS Stock Price 30% 70% 1.25 0.55 36.25 40% 60% 1.40 0.60 37.75 50% 50% 1.60 0.65 39.50 40% 60% 1.85 0.75 38.75 70% 30% 1.75 0.70 38.25 Which capital structure shown in the preceding table is Universal Exports Inc.'s optimal capital structure? Debt ratio 30%; equity ratio 70% Debt ratio 50%; equity ratio 50% Debt ratio 60%; equity ratio 40% Debt ratio 70%; equity ratio 30% O Debt ratio = 40%; equity ratio 60% Consider this case: Globo-Chem Co. is an all-equity firm, and it has beta of 1. It considering changing its capital structure to 60% equity and 40% debt. The firm's cost of debt will be 6%, and it will face a tax rate of 35%. decides to make this change in its capital structure? What will Globo-Chem Co. beta be if Now consider the case of another company: U.S. Robotics Inc. has a current capital structure of 30% debt and 70% equity. Its current before-tax cost of debt is 6%, and its tax rate is 35%. It currently has a levered beta of 1.15. The risk-free rate is 3%, and the risk premium on the market is 7.5% U.S. Robotics Inc. is considering changing its capital structure to 60% debt and 40% equity. Increasing the firm's level of debt will cause its before-tax cost of debt to increase to 8%. Use the Hamada equation to unlever and relever the beta for the new level of debt. What will the firm's weighted average cost of capital (WACC) be if it makes this change in its capital structure? Which of the following statements regarding a firm's optimal capital structure are true? Check all that apply. The optimal capital structure maximizes the firm's EPS. The optimal capital structure maximizes the firm's stock price. The optimal capital structure minimizes the firm's cost of equity. The optimal capital structure minimizes the firm's WACC. The optimal capital structure minimizes the firm's cost of debt. O000O