EPS and Optimal Debt Ratio
September 9th, 2022
I need some help in estimating the Optimal Debt Ratio with steps.
DEBT RATIO EPS STANDARD DEVATION OF EPS
0% $2.30 $1.15
20% $3.00 $1.80
40% $3.50 $2.80
60% $3.95 $3.95
80% $3.80 $5.53
Estimate the optimal debt ratio on the basis of the relationship between
Earnings per share and the debt ratio. You may find it helpful to graph the
relationship.