Your firm is currently considering changing its capital structure. You have come up with the following estimates for the present value of the tax shield as well as the probability of financial distress at different capital structures:

Debt to value (D/V) ratio	20%	40%	60%	80%
PV of tax shield ($ million)	1	2	3	4
Prob. of financial distress	0%	8%	19%	38%

If the company gets into financial distress, the costs it would incur have a present value of $8 million.

What D/V ratio should the company choose?