The Optimal Capital Structure Depends on ________ Such as Taxes,distress

question 52

Multiple Choice

The optimal capital structure depends on ________ such as taxes,distress costs,and agency costs.

• A)capital market factors
• B)market imperfections
• C)firm-specific risks
• D)systematic risks
• E)government regulations

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Definitions:

Expected Value Analysis

A statistical technique used to calculate the average outcome when the future includes scenarios that may or may not happen.

Sensitivity Analysis

The process of analyzing the impact of varying key assumptions or input variables on the outcome of a decision or model.

Annual Net Cash Flow

The difference between a company's total cash inflows and outflows over one fiscal year, reflecting its ability to generate cash.

Average Rate Of Return

A method of evaluating a capital investment proposal that focuses on the expected profitability of the investment; computed as average annual income divided by average investment. Also referred to as accounting rate of return.