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The optimal capital structure has been achieved when the: Question 10 (3 points 4 The financial leverage is minimized cost of equity is maximized C cost of debt is minimized D leverage cost of capital is maximized E weight average cost of capital is minimized Correct Answer: Question 15) (3 points) The Modigliani & Miller irrelevance theory suggests that: A the firm needs to use debt to achieve its optimal capital structure, B WACC is not affected by the capital structure C Tex shield benefits the firm's valuation D bunkruptcy costs are relevant to the firm's valuation. E the weight average cost of capital does not exist. Correct Answer: Question 16) (3 points) The Static Theory of the capital structure suggests that the optimal capital structure for a company is achieved when: A the firm is 100% financed by debt B the firm is 100% financed by equity Cthe marginal benefit of tax shield on debt = marginal cost of bankruptcy risk. D cost of equity - cost of debt E cost of equity cost of debt x (1 - tax) Correct