24.

Which of the following statements is most correct regarding capital structure?

Group of answer choices

The capital structure that minimizes the firm's cost of capital is also the capital structure that maximizes the firm's earnings per share.

The capital structure that minimizes the firm's cost of capital is also the capital structure that maximizes the firm's stock price.

If a firm finds that the cost of debt financing is currently less than the cost of equity financing, an increase in its debt ratio will always reduce its cost of capital.

A firm can finance itself through retained earnings without paying a flotation cost. Therefore, the cost of retained earnings is lower than the after-tax cost of debt financing.