Leverage and capital structure
EPS is the dollars and INVESTOR IS %'S they got jumbled
capital structure debt ratio: 0% ,10, 20, 30, 40, 50, 60
EARNINGS PER SHARE $6.24, 7.80, 9.60,10.88, 11.02, 10.00, 8.80
Investor required return rate 13%,15,16,17,19,20,22
a) Using the capitalized earnings method (EPS/RS), compute the estimated share values associated with each of the capital structures.
B) Select the optimal capital structure on the basis of:
a. Maximization of expected earnings per share.
b. Maximization of share value
c) Which capital structure do you recommend? And why?