A Firm Sets a Target Capital Structure to Use When

question 60

Multiple Choice

A firm sets a target capital structure to use when raising new funds in an effort to:

• A)maximize its earnings per share (EPS).
• B)minimize its cost of debt (rd).
• C)maximize the dividend per share it pays commons stockholders.
• D)minimize its cost of equity (rs).
• E)minimize its weighted average cost of capital (WACC).

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Definitions:

Lightning

A natural phenomenon involving a sudden electrostatic discharge during a storm, resulting in a bright flash and typically thunder.

Liable

Legally responsible or obligated to compensate for harm or damages caused.

Garage

A building or indoor area designed for the storage and maintenance of vehicles.

Common Carrier

A business or agency that is available to the public for transportation of people, goods, or messages, under certain legal obligations.