A firm's optimal capital structure:

a. is found by locating the mix of debt and equity which causes the earnings per share to equal exactly $1.

b. is the debt-equity ratio that exists at the point where the firm's weighted aftertax cost of debt is minimised.

c. is the debt-equity ratio that results in the lowest possible weighted average cost of capital.

d. is generally a mix of 40 percent debt and 60 percent equity.

e.exists when the debt-equity ratio is .50.