In determining the optimum capital structure, it is assumed that the firm will raise capital in the optimum proportions every year.
The firm must constantly reevaluate its capital structure for changes, in order to allow them to change their approach in their next round of financing.

Question

Quizplus · Accepted Answer

The statement is false. While it is important for a firm to periodically evaluate and adjust its capital structure, it is not necessary to raise capital every year or in the same proportions each time. Factors such as market conditions, investment opportunities, and changes in the firm's financial position may result in changes to the capital structure.

In Determining the Optimum Capital Structure, It Is Assumed That