From the Information Below,select the Optimal Capital Structure for Mountain

question 107

Multiple Choice

From the information below,select the optimal capital structure for Mountain High Corp.

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

---

Definitions:

Inventory Cost

The total cost incurred for obtaining, storing, and managing inventory that has not yet been sold.

Retail Method

An inventory valuation method used in retail, estimating inventory costs based on the relationship between the cost and retail price of goods.

Inventory Costing

A method used to value inventory, determining the cost of goods sold and remaining inventory value.

Markup

The amount added to the cost of goods to cover expenses and generate profit, usually expressed as a percentage of the cost.