Understanding the optimal capital structure Review this situation: Universal Exports Inc s trying to identify its optimal capital structure. Universal Exports Inc. has gathered the following financial information to help with the analysis Debt Ratio Equity Ratio EPS DPS Stock Price 30% 70% 1.55 0.34 22.35 40% 60% 1.67 0.45 24.56 50% 50% 72 0.51 25.78 60% 40% 1.78 0.57 27.75 30% 84 0.62 26.42 70% Which capital structure shown in the preceding table is Universal Exports Inc.'s optimal capital structure? O Debt ratio 40%; equity ratio 60% o Debt ratio 70%; equity ratio 30% O Debt ratio 50%; equity ratio 50% O Debt ratio 60%; equity ratio 40% O Debt ratio 30%; equity ratio 70% Consider this case: Globo-Chem Co. is an equity firm, and it has a beta of 1. It is considering changing its capital structure to 65% equity and 35% debt. The firm's cost of debt will be 8%, and it will face a tax rate of 35% What will Globo-Chem Co.'s beta be if it decides to make this change in its capital structure? 49 1.49 76 35 Now consider the case of another company: 22