The Optimal Firm Value Is Achieved When The

question 332

Multiple Choice

The optimal firm value is achieved when the:

• A) Present value of the bankruptcy cost is minimized.
• B) The interest tax shield on debt is maximized.
• C) Weighted average cost of capital is minimized.
• D) Debt-equity ratio is maximized.
• E) Total net gain from leverage is equal to zero.

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Definitions:

Regression

A statistical method used to understand the relationship between a dependent variable and one or more independent variables.

Kilowatt-Hours

A unit of energy measurement equal to the power consumption of one thousand watts for one hour.

Square Feet

A unit of area measurement in the Imperial and US customary systems, used to measure the size of an area.

Selling Price

The final amount of money charged for a product or service, representing the cost to the buyer under conditions of sale.