Which of the following statements is CORRECT? Answer As a rule, the optimal capi
ID: 2673696 • Letter: W
Question
Which of the following statements is CORRECT?
Answer
As a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS.
The optimal capital structure simultaneously maximizes EPS and minimizes the WACC.
The optimal capital structure minimizes the cost of equity, which is a necessary condition for maximizing the stock price.
The optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC.
The optimal capital structure simultaneously maximizes stock price and minimizes the WACC.
Explanation / Answer
The optimal capital structure simultaneously maximizes stock price and minimizes the WACC. -correct option
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