A company's optimal capital structure occurs when
A) ROA is maximized.
B) the company assets are funded by 50% debt and 50% equity.
C) the company can borrow at a rate lower than its ROA.
D) ROE is maximized.

Question

Quizplus · Accepted Answer

The optimal capital structure is achieved when the company's return on equity (ROE) is maximized, as it indicates the most efficient use of debt and equity to generate profits for shareholders.

A Company's Optimal Capital Structure Occurs When