A firm should raise capital according to its optimal capital structure so as to maximize its

Question

Quizplus · Accepted Answer

The goal of maximizing the firm's value is best achieved by raising capital according to the optimal capital structure, which balances the costs and benefits of debt and equity financing. This leads to a lower cost of capital and higher stock price, ultimately maximizing shareholder value. EPS and net income alone do not necessarily reflect the firm's overall financial health, and optimizing for WACC alone may not provide the best outcomes for shareholders.

A Firm Should Raise Capital According to Its Optimal Capital