All of the following statements regarding capital structure weights in the WACC equation are correct except:
A)The weights represent a firm's most recent financing mix.
B)These target weights represent a mix of debt and equity that the firm will try to achieve or maintain for a period of at least 5 years.
C)As much as possible,the target weights should reflect the combination of debt and equity that management believes will maximize the firm's weighted average cost of capital.
D)The firm should make an effort over time to move toward and maintain its target capital structure mix of current liabilities,debt and equity.
E)All of the above statements are correct.

Question

Quizplus · Accepted Answer

The Answer of All of the following statements regarding capital structure weights in the WACC equation are correct except:
A)The weights represent a firm's most recent financing mix.
B)These target weights represent a mix of debt and equity that the firm will try to achieve or maintain for a period of at least 5 years.
C)As much as possible,the target weights should reflect the combination of debt and equity that management believes will maximize the firm's weighted average cost of capital.
D)The firm should make an effort over time to move toward and maintain its target capital structure mix of current liabilities,debt and equity.
E)All of the above statements are correct.

All of the Following Statements Regarding Capital Structure Weights in the WACC