Optimal capital structure Jackson Trucking Company is in the process of setting its target capital structure. The CFO believes 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 Projected Stock Price 20% $3.30 $34.75 30 3.40 35.75 40 3.75 36.25 50 3.60 33.75 At what debt ratio is the company's WACC minimized? Round your answer to two decimal places.

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Optimal capital structure

Jackson Trucking Company is in the process of setting its target capital structure. The CFO believes 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 Projected Stock Price
20% $3.30 $34.75
30 3.40 35.75
40 3.75 36.25
50 3.60 33.75


At what debt ratio is the company's WACC minimized? Round your answer to two decimal places.

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