The firm's target capital structure should be consistent with which of the following statements?
A) Maximize the earnings per share (EPS).
B) Minimize the cost of debt (rd).
C) Obtain the highest possible bond rating.
D) Minimize the cost of equity (rs).
E) Minimize the weighted average cost of capital (WACC).

Question

Quizplus · Accepted Answer

The target capital structure should aim to minimize the weighted average cost of capital (WACC) because this will maximize the firm's value and ensure the most efficient use of capital.

The Firm's Target Capital Structure Should Be Consistent with Which