Ross, S$.$ A$.,$ Westerfield, R$.$ W$.,$ Jaffe, J$.$ F$.,$ & Jordan, B$.$ D$.(2021).$ Corporate finance: Core principles and applications $(6$th ed$.).$ McGraw$-$Hill.

The following two chapters deal with the capital structure of a firm, that is$,$ how a firm will finance itself, via debt or equity. These chapters examine the features, benefits, and negatives of financing through both financing types.

Chapter $14,$ "Capital Structure: Basic Concepts," pages $423450.$

Chapter $15,$ "Capital Structure: Limits to the Use of Debt," pages $451479.$

This week you completed an interactive exercise on computing WACC. In doing so$,$ you saw the fluctuation of WACC by employing varying amounts of debt and equity financing components.

It is important for you to understand the cost of capital and what factors impact the level of costs because firms that can lower costs of capital typically have a better array of investing options and with that more opportunities to increase company value. As a result, all firms should strive to combine their financing mix to the point where the overall WACC is at its lowest point. This way, the lowest cost of financing will allow for a greater variety of investment projects to invest in$.$

For this discussion, make sure you have completed the Calculating WACC interactive exercise in this unit's study. Based on your experience with the exercise and the materials for this week, indicate why companies have their own individualized capital structure and resulting WACC. How does WACC and capital structure affect the attractiveness of the firms to investors?