The optimal capital structure is the mixture of debt and equity which maximizes the value of the firm and minimizes the firm's weighted average cost of capital.
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Q15: Ignoring financial distress costs, borrowing money decreases
Q16: When a firm is operating at its
Q17: Volatility of earnings will affect the optimal
Q18: When EBIT is positive, the effect of
Q19: It appears that, capital structures vary quite
Q21: The actual value of a firm is
Q22: Assume there are no personal or corporate
Q23: M&M Proposition II with no tax states
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Q25: Business risk applies to levered firms but
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