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Question 9 (10 points) Listen With multiple theories addressing the capital structure decision, corporate executives should always adopt the capital structure that: 1) neutralizes the
Question 9 (10 points) Listen With multiple theories addressing the capital structure decision, corporate executives should always adopt the capital structure that: 1) neutralizes the cost of financial distress 2) allows for the total market value of debt to be equal to total market value of equity 3) turns the firm unleveraged since without leverage a firm cannot go bankrupt 4) maximizes shareholders' equity Question 10 (10 points) Listen A capital structure is regarded as optimal when the following conditions are present: 1) the debt-equity ratio is below one 2) the combination of debt and equity that reduces the weighted average cost of capital 3) the highest pre-tax cost of debt that maximizes the interest rate tax shield 4) weight of debt is equal to that of equity
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