When choosing a capital structure, the objective of the firm should be to a) cho
ID: 2797839 • Letter: W
Question
When choosing a capital structure, the objective of the firm should be to
a) choose the one that maximizes the firm's WACC
b) choose any capital structure since capital structure is always irrelevant
c) choose the one that minimizes the value of the firm
d) choose the one that maximizes the current value of the stock
a) choose the one that maximizes the firm's WACC
b) choose any capital structure since capital structure is always irrelevant
c) choose the one that minimizes the value of the firm
d) choose the one that maximizes the current value of the stock
Explanation / Answer
When choosing a capital structure, the objective of the firm should be to choose one that minimizes the firms WACC and maximizes the wealth of the shareholders by maximizing value of the firm.
Correct Answer D
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