Question
Using the following information for Handy Hardware, determine the capital structure that results in the lowest weighted average cost of capital (WACC) for the firm.
Using the following information for Handy Hardware, determine the capital structure that results in the lowest weighted average cost of capital (WACC) for the firm. Explain your answer.
| Proportion of Debt | Earnings Per Share | Stock Price P0 |
| 10% | $3.85 | $95.40 |
| 30% | 3.98 | $97.25 |
| 50% | 4.10 | $96.80 |
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Financial Management For Decision Makers
Authors: Peter Atrill
7th Edition
129201606X, 978-1292016061
