Which One of These Relationships Will Exist If a Firm

question 35

Multiple Choice

Which one of these relationships will exist if a firm is operating under its optimal capital structure?

• A)The net present value of the firm will equal zero.
• B)The firm's cost of capital will equal the risk-free rate.
• C)The present value of the financial distress costs will equal the present value of the tax shield on debt.
• D)The value of the firm will equal the maximum value obtainable according to the MM theories.
• E)The firm will be financed with equal amounts of long-term debt and equity.

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Definitions:

Natural Gas

A fossil fuel used as a source of energy for heating, cooking, and electricity generation, consisting mainly of methane and other hydrocarbons.

Hybrid Vehicles

Cars that use a combination of at least one electric motor alongside a gasoline engine to drive the vehicle, offering improved fuel efficiency and reduced emissions.

Left Shift

In programming, the operation of moving bits to the left in a binary number, effectively multiplying the number by a factor of two for each shift.

Quantity Demanded

The total amount of a product or service that consumers are willing and able to purchase at a given price.