Triple D Corporation is all equity financed with total assets valued at $1 million, which are assumed constant. The corporation's ordinary shares are valued at $25 each, and the firm is in the 40 percent tax bracket. The corporation wishes to analyze five possible capital structures- 0, 15, 30, 45, and 60 percent debt-equity ratios. Exhibit 1 shows the additional data which have been gathered for use in analyzing the five capital structures under consideration.

Exhibit 1: Triple D Corporation's alternative capital structures Capital structure Interest rate on debt debt-equity ratio 0% 0.0% 15 8.0 30 10.0 45 13.0 60 17.0Exhibit 2 TRIPLE D CORPORATION Income Statements 2017 2018 2019 Sales (all on credit) $1,500,000 $1,800,000 $2, 160,000 Cost of goods sold . . . 950,000 1,120,000 1.300,000 Gross profit. 550,000 680,000 860,000 Selling and administrative expense. 380,000 490,000 590,000 Operating profit 170,000 190,000 270,000 Interest expense. 30,000 40,000 85,000 Net income before taxes. 140,000 150,000 185,000 Taxes.......... 46,120 48,720 64,850 Net Income $93,880 $101,280 $120, 150 Shares.. 40,000 40,000 46,000Exhibit 3 Triple D CORPORATION Balance Sheets Assets 2017 2018 2019 Cash....... $20,000 $30,000 $20,000 Marketable securities. 30,000 35,000 50,000 150,000 230,000 330,000 250.000 285.000 325.000 Total Current Assets. 450,000 580,000 725,000 Net Plant and equipment 550.000 720,000 1,169.000 Total Assets. $1,000,000 $1,300,000 $1,894,000 Liabilities & Equity Accounts payable. $100,000 $225,000 $200,000 Notes payable (bank) 100.000 100.000 300.000 Total Current liabilities 200,000 325,000 500,000 Long-term liabilities 250.000 331.120 550.740 Total liabilities. 450,000 656,120 1,050,740 Common stock ($10 par) 400,000 400,000 460,000 Capital paid in excess of par. 50,000 50,000 80,000 Retained earnings.. 100.000 193.880 303.260 Total stockholders' equity.. 550.000 643.880 843.260 Total liabilities and stockholders' equity. $1.000,000 $1.300,000 $1.894.000Exhibit 4: Triple D corporation's Projected sales and purchases Year Month Sales Purchases 2019 September $210,000 $120,000 2019 October 250,000 150,000 2019 November 170,000 140,000 2019 December 160,000 100,000 2020 January 140,000 80,000 2020 February 180,000 110,000 2020 March 200,000 100,000 2020 April 250,000 90,000Exhibit 5: Triple D Corporation's investment choices Game Initial Investment Present value of Probabilities cash inflows Sign Away $140,000 1.00 $320,000 0.30 220,000 0.50 -80,000 0.20 Monopolistic $120,000 1.00 Competition $260,000 0.20 200,000 0.45 -50,000 0.35