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azamat
3 years ago
15

The firm's target capital structure should do which of the following?

Business
1 answer:
inysia [295]3 years ago
8 0

Answer:

e. Minimize the weighted average cost of capital (WACC)

Explanation:

A: Earnings per share is linked to the stockholders' only, therefore, it cannot achieve the target capital structure. It is a wrong statement.

B: Minimizing the cost of equity is related to the equity only, so, it is also a false statement.

C: Cost of debt is only related to liabilities. It cannot minimize the total target capital structure. Therefore, it cannot be an answer.

D: It is out of question because target capital structure cannot obtain the bond rating.

E: Since weighted average cost of capital is the combination of debt and equity capital's cost, it can be minimized with the firm's target capital structure.

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