Question
f. Plot the expected EPS and coefficient of variation of EPS against the capital struc-tures (x-axis) on separate sets of axes, and comment on the
f. Plot the expected EPS and coefficient of variation of EPS against the capital struc-tures (x-axis) on separate sets of axes, and comment on the return and risk rela-tive to capital structure.
g. Using the EBIT-EPS data developed in part d, plot the 0%, 30%, and 60% capi-tal structures on the same set of EBIT-EPS axes, and discuss the ranges over which each is
h. Using the valuation model given in Equation 13.12 and your findings in part e, estimate the share value for each of the capital structures being considered.
i. Compare and contrast your findings in parts f and h. Which structure is pre-ferred if the goal is to maximize EPS? Which structure is preferred if the goal is to maximize share value? Which capital structure do you recommend? Explain.
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