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Hello, please advise, thanks Terrell Trucking Company is in the process of setting its target capital structure. The CFO believes that the optimal debt-to-capital ratio
Hello, please advise, thanks
Terrell Trucking Company is in the process of setting its target capital structure. The CFO believes that the optimal debt-to-capital ratio is somewhe between 20% and 50%, and her staff has compiled the following projections for EPS and the stock price at various debt levels: 20% Debt/Capital Ratio Projected EPS Projected Stock Price $3.30 $32.50 30 3.65 37.75 40 3.85 37.00 50 3.55 32.50 Assuming that the firm uses only debt and common equity, what is Terrell's optimal capital structure? Choose from the options provided above. Round your answers to two decimal places. % debt % equity At what debt-to-capital ratio is the company's WACC minimized? Choose from the options provided above. Round your answer to two decimal places. %Step by Step Solution
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