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According to the pecking order theory of financing: O a. The optimal capital structure is determined at that specific financing level where the cost of
According to the pecking order theory of financing: O a. The optimal capital structure is determined at that specific financing level where the cost of equity is minimized. O b. Companies would prefer to first use internal funds (i.e. retained earnings) to finance themselves, they would then turn to debt and they would only issue new shares as a last resort. O c. Companies would prefer to first use external funds (i.e. new debt or new equity) to finance themselves, and they would only use internal funds if they cannot raise external capital. O d. The optimal capital structure is determined at that specific financing level where WACC is minimized. O e. Companies would prefer to first use internal funds (i.e. retained earnings) to finance themselves, they would then turn to new shares and they would only use new debt as a last resort
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