The primary objective of capital structure management is to find the combination of funding sources that will minimize the
A)interest rate.
B)WACC.
C)probability of financial distress.
D)cost of equity.

Question

Quizplus · Accepted Answer

The primary objective of capital structure management is to find the combination of funding sources that will minimize the Weighted Average Cost of Capital (WACC). WACC is a weighted average of the cost of debt and equity, which represents the minimum return that a company must earn on all of its investments to satisfy its investors. By minimizing the WACC, a company can maximize the value of its investments and achieve a higher return on its capital. The other options, such as interest rate, probability of financial distress, and cost of equity, are important considerations in capital structure management, but they are not the primary objective.

The Primary Objective of Capital Structure Management Is to Find