The choice of the proper mixture of debt and equity, used to finance a corporation, is also referred to as the
A)capital budgeting decision.
B)capital structure decision.
C)investment decision.
D)liquidity decision.

Question

Quizplus · Accepted Answer

The choice of the proper mixture of debt and equity is referred to as the capital structure decision. This decision is important because it affects the risk and return of the company, its ability to generate future cash flows, and the cost of capital. While there is no one perfect capital structure, companies should aim to find a balance between debt and equity that optimizes their financial position and aligns with their long-term goals.

The Choice of the Proper Mixture of Debt and Equity