ra Bond Rating Amount Borrowed $0 250,000 500,000 750,000 1,000,000 1,250,000 D/Cap. Ratio 0 0.125 0.250 0.375 0.500 0.625 D/E Ratio 0 0.143 0.333 0.600 1.000 1.667 AA A BBB BB 8.0% 9.0% 11.5% 14.0% 16.5% B EBIT = $500,000 Tax rate = 35% Shares outstanding when there is no debt = 75,000 Total assets = $2,000,000 Unlevered beta = 1.00 Risk-free rate = 5% Market risk premium - 5% New debt is used to repurchase shares so total assets remain same. Find EPS and TIE for all levels of debt. Also Find the optimal capital Structure