Question

In: Finance

The identification of the proportions of debt, retained earnings, preferred stock, and common stock used to...

The identification of the proportions of debt, retained earnings, preferred stock, and common stock used to finance a firm’s operations and capital investments is referred to as the:

A. Capital structure decision

B. Financing decision

C. Financial risk decision

D. Capital budgeting decision

New projects should be funded using:

A. The same proportions of debt and equity that finance a firm’s total assets

B. The source of funds (debt or equity) with the lowest cost of capital

C. Debt only

D. Retained earnings, if these are enough to cover the funding of the project

Solutions

Expert Solution

A. Capital structure decision

The capital structure is way how a firm finances its overall fund requirements and growth by using different ways of funds.

B. The source of funds (debt or equity) with the lowest cost of capital

as it will maximize shareholder wealth

jeff jeffy answered 1 year ago
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