Based on the Information Below, What Is Ezzel Enterprises' Optimal

question 32

Multiple Choice

Based on the information below, what is Ezzel Enterprises' 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:

Competitive Market

A market structure characterized by a large number of firms competing against each other, leading to efficient prices and products.

Resources

Assets, materials, and inputs needed to produce goods and services.

Overallocated

A situation where resources are disproportionately distributed or excessively committed to a particular project or area, potentially leading to inefficiencies.

Production

Production is the process of creating goods or services through the combination of labor, materials, and technology to meet consumer demand.