What debt-to-capital ratio is the company''s wacc minimized

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Terrell Trucking Company is in the process of setting its target capital structure. The CFO believes that 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 Ratio Projected EPS Projected Stock Price
            20% $3.10         $32.75            
            30 3.45         35.75            
            40 3.75         36.00            
            50 3.55         32.25            

Assuming that the firm uses only debt and common equity, what is Terrell's optimal capital structure? Round your answers to two decimal places.
% debt
% equity
At what debt-to-capital ratio is the company's WACC minimized? Round your answer to two decimal places.

 

Reference no: EM131715614

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