Ww.225. 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 andthe stock price at various debt levels:Debt/Capital Ratio Projected EPS$3.253.4020%3040503.85% debt% equityProjected Stock Price$34.2537.7537.503.5533.25Assuming that the firm uses only debt and common equity, what is Terrell's optimal capital structure? Choose from theoptions provided above. Round your answers to two decimal places.At what debt-to-capital ratio is the company's WACC minimized? Choose from the options provided above. Round youranswer to two decimal places.%

The optimal capital structure is the one at which the value of the firm is maximized, i.e. the…

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 $3.25 20% 30 40 50 3.40 3.85 37.50 3.55 33.25 Assuming that the firm uses only debt and common equity, what is Terrell's optimal capital structure? Choose from the options provided above. Round your answers to two decimal places. % debt % equity Projected Stock Price $34.25 37.75 At what debt-to-capital ratio is the company's WACC minimized? Choose from the options provided above. Round your answer to two decimal places. %