12-12. Using the following information for Handy Hardware, determine the capital structure that results in the lowest weighted average cost of capital (WACC) for the firm. Explain your answer. (LO 12-2) Proportion of Debt Proportion of Debt 10% 30 50 Earnings per Share (EPS) Earnings per Share (EPS) $3.85 3.98 4.10 Stock Price, Po Stock Price, Po $95.40 97.25 96.80

12-12. Using the following information for Handy Hardware, determine the capital structure that results in the lowest weighted average cost of capital (WACC) for the firm. Explain your answer. (LO 12-2) Proportion of Debt Proportion of Debt 10% 30 50 Earnings per Share (EPS) Earnings per Share (EPS) $3.85 3.98 4.10 Stock Price, Po Stock Price, Po $95.40 97.25 96.80

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section9.8: The Weighted Average Cost Of Capital (wacc)

Problem 3ST

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