Question

Which of the following choices is CORRECT?

Select one:

a. An optimal capital structure simultaneously maximizes EPS and minimizes the WACC

b. An optimal capital structure simultaneously maximizes stock price and minimizes the WACC

c. An optimal capital structure minimizes the cost of equity, which leads to maximizing the stock price

d. An optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC

e.  An optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS

Answer 1

The correct answer is:-

b) An optimal capital structure simultaneously maximizes the stock price and minimizes the WACC.