The firm's target capital structure is consistent with which of the following?
A)Maximum earnings per share.
B)Minimum cost of debt (rd).
C)Minimum risk.
D)Minimum cost of equity (rs).
E)Minimum weighted average cost of capital.

Question

Quizplus · Accepted Answer

The firm's target capital structure should aim to minimize the weighted average cost of capital (WACC), which represents the cost of capital for the entire company. This is important because a lower WACC will increase the firm's overall value and make it more attractive to investors. The other options (A, B, C, and D) may be important considerations, but they do not represent the overall goal of the target capital structure.

The Firm's Target Capital Structure Is Consistent with Which of the Following