According to the following information, what is the firm's optimal capital structure? Proportion Earnings Per Weighted Average Cost of Debt Share (EPS) of Capital (WACC) 30% $2.50 13.2% 40 3.80 12.7 50 4.75
12.4 60 5.25 12.8
A. 30%
B. 40%
C. 50%
D. 60%
E. To determine the optimal capital structure, the market value of the stock must be known.
Answer: C
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