The Optimal Capital Structure Involves

question 29

Multiple Choice

The optimal capital structure involves

• A) ​maximizing the cost of all funds
• B) ​minimizing the cost of all funds
• C) ​using no financial leverage
• D) ​minimizing the weighted average of the cost of funds

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Definitions:

Exhaustible Resource

A natural resource, such as oil or coal, that has a finite supply and can be depleted if used unsustainably.

User Cost

The cost of using a product or service, taking into account factors such as depreciation, wear and tear, and opportunity cost of using the asset rather than investing the money elsewhere.

Depletable Resource

A natural resource that can be diminished by use, such as fossil fuels or minerals, which are not renewable over short time spans.

User Cost

The cost of using a good or service, including the actual price paid and other sacrifices (like time or effort).