Q14 Which of the following statements is CORRECT? Select one: a. The optimal cap

Question

Q14

Which of the following statements is CORRECT?

Select one:

a. The optimal capital structure simultaneously maximizes stock price and minimizes the WACC.

b. The optimal capital structure minimizes the cost of equity, which is a necessary condition for maximizing the stock price.

c. The optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC.

d. The optimal capital structure simultaneously maximizes EPS and minimizes the WACC.

e. As a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS.

Explanation / Answer

The optimal capital structure simultaneously maximizes stock price and minimizes the WACC. -correct option

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