A general rule for managers to follow is to set the firm's capital structure such that:
A)the firm's value is minimized.
B)the firm's bondholders are made well off.
C)the firm's value is maximized.
D)the firms dividend payout is maximized.
E)the firms suppliers of raw materials are satisfied.

Question

Quizplus · Accepted Answer

The goal of a manager should be to maximize the value of the firm for its shareholders. This can be achieved by setting an optimal capital structure that balances the costs and benefits of various sources of funding, such as debt and equity. Maximizing the firm's value also benefits bondholders, suppliers, and other stakeholders, as they will benefit from a healthier and more profitable firm. Dividend payouts should be determined based on the firm's capital needs and growth opportunities, and should not be the primary goal of the capital structure decision.

A General Rule for Managers to Follow Is to Set