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    Corporate Finance Study Set 12
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    Exam 17: Capital Structure: Limits to the Use of Debt
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    The Optimal Capital Structure Has Been Achieved When The
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The Optimal Capital Structure Has Been Achieved When The

Question 1

Question 1

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 pre-tax cost of debt.
D) debt-equity ratio selected results in the lowest possible weighed average cost of capital.

Correct Answer:

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