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Integrative-Optimal capital structure Medallion Cooling Systems, Inc, has total assets of $10,200,000, EBIT of S2,040,000, and preferred dividends of 5205,000 and is taxed at a

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Integrative-Optimal capital structure Medallion Cooling Systems, Inc, has total assets of $10,200,000, EBIT of S2,040,000, and preferred dividends of 5205,000 and is taxed at a rate of 40%. In an effort to determine the optimal capital structure, the firm has assembled data on the cost of debt, the number of shares of common stock for various levels of indebtedness, and the overall required return on investment Capital structure Number of common debt ratio Cost of debt, rd stock shares Required return, 0% 0% 201,000 12 15 15 8.1 172,000 131 30 8.7 138,000 14.3 45 122 111,000 16.1 60 153 77,000 202 a. Calculate earnings per share for each level of indebtedness b. Use the equation Po= EPS/t, and the earnings per share calculated in part (a) to calculate a price per share for each level of indebtedness. c. Choose the optimal capital structure. Justify your choice Dwww

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