X Corp needs 20M in its project. Estimated earnings are 20M.Par value of share is 400 per share. Which of the three capital structures will give the highest MPPS (market price per share)? CS equity 20M 16M Debt ratio 0% 20% 30% Borrowings 0 4M ?? Int rate 8% 9% 9.5% ?? PE ratio 14 13 12.5

X Corp needs 20M in its project. Estimated earnings are 20M.Par value of share is 400 per share. Which of the three capital structures will give the highest MPPS (market price per share)? CS equity 20M 16M Debt ratio 0% 20% 30% Borrowings 0 4M ?? Int rate 8% 9% 9.5% ?? PE ratio 14 13 12.5

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 7P

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Question

Which of the three capital structures will give the highest MPPS (market price per share)?

choices:

Debt ratio of 0%

Debt ratio of 20%

Any of the above

Debt ratio of 30%

X Corp needs 20M in its project. Estimated earnings are 20M.Par value of share is 400 per share. Which
of the three capital structures will give the highest MPPS (market price per share)?
Debt ratio
0%
20%
30%
Borrowings
0
4M
??
Int rate
8%
9%
9.5%
CS equity
20M
16M
??
PE ratio
14
13
12.5

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