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) present value of the financial distress costs equals the present value of the tax shield on debt.
Correct Answer:
Verified
Correct Answer:
Verified
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