At what debt ratio is the company wacc minimized

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Jackson Trucking Company is in the process of setting its target capital structure. The CFO believes the optimal debt-to-capital ratio is somewhere between 20% and 50%, and her staff has compiled the following projections for EPS and the stock price at various debt levels:

Debt/Capital........................Projected.....................Projected Stock
Ratio...................................EPS.............................Price

20%..................................$3.30..............................$34.75
30%..................................$3.40..............................$35.75
40%..................................$3.75..............................$36.25
50%..................................$3.60..............................$33.75

At what debt ratio is the company's WACC minimized? Round your answer to two decimal places.

 

Reference no: EM13286502

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