Greentrees optimal capital structure

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GreenTrees Corporation currently has $60 million in liabilities and common equity in combination. There are no preferred stock. The CFO constructed the following table to show the effect of changing the firm's capital structure:

Amount of Debt in the Capital Structure ($)

Earnings per Share(EPS) ($)

Market Price per Share (Po) ($)

20,000,000

5.0

125.5

30,000,000

5.5

130.75

40,000,000

5.7

130

Using this information, what is GreenTrees optimal capital structure? Explain your answer

Reference no: EM131051632

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