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Within the context of optimal capital structure, DDD Company is in the process of setting its target capital structure. The company believes that the optimal

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Within the context of optimal capital structure, DDD Company is in the process of setting its target capital structure. The company believes that the optimal debt-to-capital ratio is somewhere between 20% and 50%, and the staff has compiled the following projection for the earnings per share (EPS) and the stock price at various debt levels: Debt/Capital Ratio Projected EPS Projected Stock Price 20% $3.10 $34.25 $3.55 $36.00 30% $35.50 $3.70 40% 50% $3.55 $34.00 Assuming that the firm uses only debt and common equity, what is the company's optimal capital structure? Select one: 20% debt and 80% equity O b. 70% debt and 30% equity 30% debt and 70% equity Od 50% debt and 50% equity 80% debt and 20% equity e

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