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Increase in Capital Budget
Increase Debt Lower Payout Do Both to 75% to
20%___________________
a. $114.0 $73.3 $333.9
b. $120.0 $77.2 $351.5
c. $126.4 $81.2 $370.0
d. $133.0 $85.5 $389.5
e. $140.0 $90.0 $410.0
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FIN 534 Week 8 Chapter 15 Solution
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Which of the following statements best describes the optimal capital
structure?
a. The optimal capital structure is the mix of debt, equity, and preferred
stock that maximizes the company’s earnings per share (EPS).
b. The optimal capital structure is the mix of debt, equity, and preferred
stock that maximizes the company’s stock price.
c. The optimal capital structure is the mix of debt, equity, and preferred
stock that minimizes the company’s cost of equity.