Multiple Choice
Which of the following statements is most correct?
A) The optimal capital structure minimizes the WACC.
B) If the after-tax cost of equity financing exceeds the after-tax cost of debt financing,firms are always able to reduce their WACC by increasing the amount of debt in their capital structure.
C) Increasing the amount of debt in a firm's capital structure is likely to increase the cost of both debt and equity financing.
D) Answers a and c are both correct.
E) Answers b and c are both correct.
Correct Answer:
Verified
Correct Answer:
Verified
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