The best financial structure is determined by finding the debt and equity mix that maximizes the firm's cost of capital.

Question

Quizplus · Accepted Answer

The best financial structure is determined by finding the debt and equity mix that minimizes the firm's cost of capital, not maximizes it. Maximizing the cost of capital would result in higher financing costs for the firm, whereas minimizing it would result in lower financing costs and potentially higher profits.

The Best Financial Structure Is Determined by Finding the Debt