The Optimal Capital Structure Has Been Achieved When The

question 46

Multiple Choice

The optimal capital structure has been achieved when the:

• A) debt-equity ratio is equal to 1.
• B) weight of equity is equal to the weight of debt.
• C) cost of equity is maximized given a pretax cost of debt.
• D) debt-equity ratio is such that the cost of debt exceeds the cost of equity.
• E) debt-equity ratio results in the lowest possible weighted average cost of capital.

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