Based on the information below for Benson Corporation, what is the optimal capital structure?
| a. | Debt = 40%; Equity = 60%; EPS = $2.95; Stock price = $26.50. | |
| b. | Debt = 50%; Equity = 50%; EPS = $3.05; Stock price = $28.90. | |
| c. | Debt = 60%; Equity = 40%; EPS = $3.18; Stock price = $31.20. | |
| d. | Debt = 80%; Equity = 20%; EPS = $3.42; Stock price = $30.40. | |
| e. | Debt = 70%; Equity = 30%; EPS = $3.31; Stock price = $30.00. |
Answer is c. Debt = 60%; Equity = 40%; EPS = $3.18; Stock price = $31.20.
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