Which of the Following Statements Is CORRECT

question 58

Multiple Choice

Which of the following statements is CORRECT?

• A) The optimal capital structure simultaneously maximizes EPS and minimizes the WACC.
• B) The optimal capital structure minimizes the cost of equity, which is a necessary condition for maximizing the stock price.
• C) The optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC.
• D) The optimal capital structure simultaneously maximizes stock price and minimizes the WACC.
• E) As a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS.

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Definitions:

Car Dealership

A business that specializes in the sale of new or used cars.

Office Supplies

Office supplies refer to various items and equipment used in offices or for professional purposes, such as stationery, computers, and furniture.

Expenses

Outflows or other using-up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities.

Assets

Resources owned by a business or individual, which have economic value and can be used to meet debts or commitments.