(Solved by Humans)-GreenTrees Corporation currently has $60 million in liabilities
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GreenTrees Corporation currently has $60 million in liabilities and common equity in combination. There are no preferred stock. The CFO constructed the following table to show the effect of changing the firm?s capital structure:
| Amount of Debt in the Capital Structure ($) | Earnings per Share(EPS) ($) | Market Price per Share (Po) ($) |
| 20,000,000 | 5.0 | 125.5 |
| 30,000,000 | 5.5 | 130.75 |
| 40,000,000 | 5.7 | 130 |
Using this information, what is GreenTrees optimal capital structure? Explain your answer
An optimal capital structure is the best debt-to-equity ratio for a firm that maximizes its value. The
optimal capital structure for a company is one which offers a balance between the ideal...
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This question was answered on: 10 May, 2025
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