Terrell Trucking Company is in the process of setting itstarget capital structure. The CFO believes that the optimal debt-to-capital ratio issomewhere between 20% and 50%, and her staff has compiled the following projections forEPS and the stock price at various debt levels:Assuming that the firm uses only debt and common equity, what is Terrell s optimal capitalstructure? At what debt-to-capital ratio is the company s WACC minimized?

Debt/Capital Ratio	Projected EPS	Projected Stock Price
20%	$3.10	$34.25
30%	3.55	36.00
40%	3.70	35.50
50%	3.55	34.00

Assuming that the firm uses only debt and common equity, what is Terrell s optimal capitalstructure? At what debt-to-capital ratio is the company s WACC minimized?