The Optimal Capital Structure Has Been Achieved When The

question 1

Multiple Choice

The optimal capital structure has been achieved when the:

• A) debt-equity ratio is equal to 1.
• B) weight of equity is equal to the weight of debt.
• C) cost of equity is maximized given a pre-tax cost of debt.
• D) debt-equity ratio selected results in the lowest possible weighed average cost of capital.

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Definitions:

Heights

The measurement of an object or entity from its base to its top.

Rows

Horizontal collections of cells in a table or spreadsheet, often used to organize and display data.

Draw Table

Draw Table is a feature found in various software applications that allows users to manually create table structures by drawing the column and row borders.

Split Cells

A function in spreadsheet or table-editing software that divides a single cell into multiple cells either horizontally or vertically.