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Which of the following statements best describes the optimal capital structure? a. The optimal capital structure...

Which of the following statements best describes the optimal capital structure?

a.

The optimal capital structure is the mix of debt, equity, and preferred stock that maximizes the company's earnings per share (EPS).
b.

The optimal capital structure is the mix of debt, equity, and preferred stock that minimizes the company's cost of preferred stock.
c.

The optimal capital structure is the mix of debt, equity, and preferred stock that minimizes the company's cost of debt.
d.

The optimal capital structure is the mix of debt, equity, and preferred stock that minimizes the company's cost of equity.
e.

The optimal capital structure is the mix of debt, equity, and preferred stock that maximizes the company's stock price.

Solutions

Expert Solution

Optimal capital structure included a combination of equity, debt and preferred stock.

An optimal structure is one which maximize the earning that is maximize earning per share.

So correct answer is part a) The optimal capital structure is a mix of debt, equity and preferred stock that maximizes the company's Earning per share (EPS)

jeff jeffy answered 2 years ago
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