Based on the Information Below,what Is the Firm's Optimal Capital

question 79

Multiple Choice

Based on the information below,what is the firm's optimal capital structure?

• A) Debt = 40%;Equity = 60%;EPS = $2.95;Stock price = $26.50.
• B) Debt = 50%;Equity = 50%;EPS = $3.05;Stock price = $28.90.
• C) Debt = 60%;Equity = 40%;EPS = $3.18;Stock price = $31.20.
• D) Debt = 80%;Equity = 20%;EPS = $3.42;Stock price = $30.40.
• E) Debt = 70%;Equity = 30%;EPS = $3.31;Stock price = $30.00.

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Definitions:

Motivation

The inner drive or process that stimulates and directs human behavior towards achieving goals.

Amount Of Information

The volume or quantity of data and knowledge accessible or required to make informed decisions.

Internal Versus External

A comparison between factors that are inside (internal) and outside (external) of an individual or entity, which can influence behavior or outcomes.

Clarity

The quality of being easily understood, completely transparent, or clear in thought, expression, or presentation.