Optimal capital structure is the capital structure at which the weighted average cost of capital is minimized, thereby maximizing a firm's value.

Question

Quizplus · Accepted Answer

This statement is true. The optimal capital structure is the mix of debt and equity financing that generates the lowest cost of capital, maximizing the total value of the firm. This is because different sources of capital have different costs, and an optimal capital structure balances the benefits and risks of each source of funding.

Optimal Capital Structure Is the Capital Structure at Which the Weighted