In problems where no equity risk premium or tax rate are pro- vided, please use an equity risk premium of 5.5% and a tax rate of 40%. Plastico, a manufacturer of consumer plastic products, is evaluating its capital structure. The balance sheet of the company is as follows (in millions): Assets Liabilities Fixed assets 4,000 Debt 2,500 Current assets 1,000 Equity 2,500 In addition, you are provided the following information: The debt is in the form of long-term bonds, with a coupon rate of 10%. The bonds are currently rated AA and are selling at a yield of 12% (the market value of the bonds is 80% of the face value). The firm currently has 50 million shares outstanding, and the current market price is $80 per share. The firm pays a dividend of $4 per share and has a price/earnings ratio of 10. The stock currently has a beta of 1.2. The risk-free rate is 8%. What is the debt(debt + equity) ratio for this firm in market value terms?

50%

80%

33%

100%