OPTIMAL CAPITAL STRUCTURE Jackson Trucking Company is in the process of setting its target capital… 1 answer below »


OPTIMAL CAPITAL STRUCTURE Jackson Trucking Company is in the arrangement of contrast its target chief organization. The CFO believes that the optimal debit homogeneity is somewhere betwixt 20% and 50%, and her staff has compiled the forthcoming projections for EPS and the hoard cost at diversified debit levels:

Debt Ratio

Projected EPS

Projected Hoard Price

20%

$3.20

$35.00

30

3.45

36.50

40

3.75

36.25

50

3.50

35.50

Assuming that the steadfast uses simply debit and vulgar equity, what is Jackson’s optimal chief organization? At what debit homogeneity is the company’s WACC minimized?