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Zippy Pasta Corporation (ZPC) has a constant growth rate of 6.5 percent. The company retains 32.0 percent of its earnings to fund future growth. ZPC's
Zippy Pasta Corporation (ZPC) has a constant growth rate of 6.5 percent. The company retains 32.0 percent of its earnings to fund future growth. ZPC's expected Earnings Per Share (i.e. EPS at t=1) and required cost of equity for various capital structures are given in the table below. Debt/Total Assets Expected EPS Cost of capital 20% $2.52 15.00% $3.07 15.50% 40% $3.52 16.00% 50% $4.04 17.00% 70% $4.27 18.00% 30% What is the highest stock price for these combinations of capital structure? (Give answer to 2 decimal places)
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