According to the Following Information, What Is the Firm's Optimal

question 4

Multiple Choice

According to the following information, what is the firm's optimal capital structure?     $\begin{array}{ccc}\text { Proportion } & \text { Earnings Per } & \text { Weighted Average Cost } \\\text { of Debt } & \text { Share (EPS) } & \text { of Capital (WACC) } \\\hline 30 \% & \$ 2.50 & 13.2 \% \\40 & 3.80 & 12.7 \\50 & 4.75 & 12.4 \\60 & 5.25 & 12.8\end{array}$

• A)30%
• B)40%
• C)50%
• D)60%
• E)To determine the optimal capital structure, the market value of the stock must be known.

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Definitions:

Concentrates Urine

The process of increasing the solute concentration of urine while removing excess water, primarily occurring in the kidneys.

Dilute Urine

Urine that has a lower concentration of solutes, often a result of increased hydration or specific kidney functions.

Excretes

The elimination of waste products from the body or a biological system, a vital process for maintaining homeostasis.

Uric Acid

A waste product formed from the breakdown of purines, substances found in certain foods, which is excreted by the kidneys in urine.