Which of the following statements is CORRECT? Question 14 options: a) As a rule,

Question

Which of the following statements is CORRECT? Question 14 options: a) As a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS. b) The optimal capital structure simultaneously maximizes EPS and minimizes the WACC. c) The optimal capital structure minimizes the cost of equity, which is a necessary condition for maximizing the stock price. d) The optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC. e) The optimal capital structure simultaneously maximizes the stock price and minimizes the WACC.

Explanation / Answer

All of the points except point E is incorrect. only point E is correct. that The optimal capital structure simultaneously maximizes the stock price and minimizes the WACC

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