Question
If Wolves Entertainment Company is acting in the best interests of stockholders (following the primary goal of the firm), which of the following is the
If Wolves Entertainment Company is acting in the best interests of stockholders (following the primary goal of the firm), which of the following is the optimal (best) capital budget for the firm?
Question 5 options:
| Debt = 40%, Equity = 60%, EPS = $2.95, Stock price = $26.50, Cost of Debt = 3.0%, Capital Budget $ 8 Million |
| Debt = 60%, Equity = 40%, EPS = $3.18, Stock price = $31.20, Cost of Debt = 4.0%, Capital Budget $ 12 Million |
| Debt = 80%, Equity = 20%, EPS = $3.28, Stock price = $29.70, Cost of Debt = 5.8%, , Capital Budget $ 16 Million |
| Debt = 50%, Equity = 50%, EPS = $3.05, Stock price = $28.90, Cost of Debt = 3.5%, Capital Budget $ 10 Million |
| Debt = 70%, Equity = 30%, EPS = $3.42, Stock price = $30.40, Cost of Debt = 5.0%, , Capital Budget $ 14 Million |
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