Asked by
Kaitlyn Paciolla
on Nov 07, 2024Verified
The target capital structure is the debt-equity mix that:
A) Maximizes the cost of capital.
B) Maximizes the value of the firm.
C) Minimizes the cost of equity financing.
D) Minimizes the cost of debt financing.
E) Minimizes the overall debt level of a firm.
Target Capital Structure
The mix of debt, equity, and other financing sources a company aims to hold to fund its operations and growth, optimized for its financial strategy and risk tolerance.
Debt-equity Mix
The ratio of a company's total debt to its equity, indicating the balance between debt and equity financing.
- Understand the concept and importance of the firm's target capital structure.
Verified Answer
AH
Learning Objectives
- Understand the concept and importance of the firm's target capital structure.
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