the optimal capital structure for a company is: Select one:
a. 50% debt, 50% equity
b. depends of the company '
c. No debt
'd. 20% debt, 80% equity
Option B is correct
Depends of the company
Explanation:
Optimal Capital Structure depends on the company and cost of different asset.
the optimal capital structure for a company is: Select one: a. 50% debt, 50% equity b....
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...
Il 12. Based on the information below, what is the firm's optimal capital structure? A. Debt 40%; Equity 60%; EPs-$2.95; Stock price = S26.50. B. Debt-30%; Equity : 50%; EPS-S3.05: Stock prices S28.90. C. Debt-: 60%; Equity 40%; EPS-$3.18: Stock price-S3120. D. Debt = 70%; Equity-30%; EPs-$3.31; Stock price-$30.00. E. Debt-80%; Equity-20%; EPs-S3.42; Stock price-S3040. 13, ABC Co.'s current stock beta is 1.25. Its tax rate is 35%, and it currently uses 55% debt and 45% equity. If the management...
What is a firm's optimal capital structure? The optimal capital structure refers to a capital structure that: (Select the best choice below.) A. is comprised of 99.9% equity capital B. will minimize the composite cost of a firm's capital for raising a given amount of funds C. will minimize the firm's common stock price D. is comprised of 99.9% debt capital.
1. The optimal capital structure has been achieved when the: A) debt-equity ratio is equal to 1. B) weight of equity is equal to the weight of debt. C) cost of equity is maximized given a pretax cost of debt. D) debt-equity ratio is such that the cost of debt exceeds the cost of equity. E) debt-equity ratio results in the lowest possible weighted average cost of capital. 2. M&M Proposition I with tax implies that the: A) weighted average...
14-2 OPTIMAL CAPITAL STRUCTURE Terrell Trucking Company is in the process of setting its Jarget capital structure. The CFO believes that the optimal debt-to-capital ratio is some- where between 20% and 50%, and her staff has compiled the following projections for EPS and the stock price at various debt levels: Debt/Capital Ratio 20% Projected EPS Projected Stock Price $3.10 3.55 $34.25 36.00 35.50 34.00 40 50 3.70 3.55 Assuming that the firm uses only debt and common equity, what is...
XYZ company faces variable costs of debt and equity depending on the capital structure of the firm as given in table below. (a) Calculate the weighted average cost of capital (WACC) at each tax rate (from 10% to 70% by increments of 10%) by filling out the table on next page. Make sure to report weighted average cost of capital numbers at 4 decimal places of accuracy such as 12.3456% or 1.0023%. Hint: You can easily do mistakes if you...
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With taxes, but in the absence of financial distress costs, the optimal capital structure would be A. 100% debt. B. 50% debt, 50% equity. C. 100% equity. D. completely insensitive to the mix of debt and equity.
Greshak Corp. is analyzing its optimal capital structure. Currently, Greshak's capital structure includes 20% debt and the company is planning to double its debt capitalization. Assume that the current risk-free rate is 4.00% and the equity risk premium is 6.25%. If the company's cost of equity, which is based on the CAPM, is 12.50% and its tax rate is 40.00%, what would Greshak's estimated cost of equity (rounded) be if the company were to change its capital structure as indicated...
11. Determining the optimal capital structure Understanding the optimal capital structure Review this situation: Universal Exports Inc. is trying to identify its optimal capital structure. Universal Exports Inc. has gathered the following financial information to help with the analysis. Debt Ratio Equity Ratio rdrd rsrs WACC 30% 70% 6.02% 9.40% 9.71% 40% 60% 6.75% 9.750% 9.55% 50% 50% 7.15% 10.60% 10.02% 60% 40% 7.55% 11.30% 10.78% 70% 30% 8.24% 12.80% 11.45% Which capital structure shown in the preceding table is...