The firm's best financial structure is determined by finding the capital structure that minimizes the firm's cost of capital.

Question

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The firm's best financial structure is determined by finding the capital structure that minimizes the firm's cost of capital. This is achieved by balancing the use of debt and equity to optimize the cost of capital, which is the minimum rate of return required by the firm's investors. By minimizing the cost of capital, the firm can maximize shareholder value and increase its profitability.

The Firm's Best Financial Structure Is Determined by Finding the Capital