The Optimal Capital Structure Has Been Achieved When the

question 43

Multiple Choice

The optimal capital structure has been achieved when the

• A)weight of equity is equal to the weight of debt.
• B)debt-equity ratio selected results in the lowest possible weighted average cost of capital.
• C)firm is totally financed with debt.
• D)debt-equity ratio is such that the cost of debt exceeds the cost of equity.
• E)cost of equity is maximized.

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Definitions:

Implementation

The process of putting a decision or plan into effect; execution.

PDCA Cycle

A four-step management method used for the control and continuous improvement of processes and products, standing for Plan-Do-Check-Act.

Develop

The process of improving or enlarging an entity, concept, or skill set through education, training, or experience leading to growth and advancement.

Control

The process by which an organization ensures that activities are being executed according to plan and adjusts as necessary to achieve objectives.