different divisions differing lines of business use different costs of capital because their cost of equity...

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Question

different divisions differing lines of business use different costs of capital because their cost of equity...

different divisions differing lines of business use different costs of capital because their cost of equity is different and also because the_ could be different.
(a) optimal asset mix
(b) optimal debt equity ratio
(c) optimal current ratio
(d) optimal volatility

business accounting

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Answer 1

Answer #1

ANSWER:

OPTION: Optimal debt equity ratio

REASON:

Cost of capital means the cost of equity capital and cost of debt capital. Therefore, overall cost of capital of a business is mainly dependent upon the mix of equity and debt in each company's optimal capital structure. Some company may use more equity capital than debt and some vice versa.

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Answer 2

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different divisions differing lines of business use different costs of capital because their cost of equity...

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