Which of the Following Statements Is Most Correct Concerning a Corporation's

question 91

Multiple Choice

Which of the following statements is most correct concerning a corporation's optimal capital structure?

• A) The optimal capital structure maximizes the present value of the interest tax shield.
• B) The optimal capital structure occurs at the point where the market value of the levered firm is maximized.
• C) The optimal capital structure minimizes the present value of financial distress costs and agency costs.
• D) The optimal capital structure occurs where the present value of the interest tax shield equals the present value of the firm's bankruptcy costs.