The choices to the last questions are:

Common Stock

Accounts Payable

Retained earnings

Long-term debt

Capital Structure Decisions: Introduction Up to this point when we calculated a firm's weighted average cost of capital (WACC), we assumed that the firm had a specific target capital structure. However, target capital structures often dange o er time, these changes amect the risk and cost of each type of capital, and thus impact the firm's wACC In addition, changes in a firm's WACC mpact its cacital budgeting decisions and its stock price. Many factors infuence capital structure deisions and determining the frm's optimal capital structure is not an exact sclence. in fact, even tims in the same industry often have dramatically different capital structurers Capital refers to investor-supelied funds-debt, preferred stock, common stock, and retained earnings A firm's capital structure is the mix of debt, preferred stock, and common equity used to capital The optimal capital structure strikes a balance between risk and return.A firm's target capital structure is generally set equal to the estimated optimal capital structure However, the targe may change over time as conditions change, but ot wny uven moment, a well mansged fim's management has s seeifh sructure in mind: and finanding decisions are made so as to be consistent with this target capital structure. Actual capital structures also change over tirne for two anterent reasons: as a resnM of deliberate actions or as a result of market actions. First.afirm is not currently at its target, it may in a manner that moves the actual capital structure toward its target. Second, the firm could incur high profits or losses that ead to significant changes in book value equity as shown on the balance sheet and to a decline in its stock price. Similarly interest rate changes due to changes in the general level of rates and/or changes in the firm's default risk could cause significant changes in its debt's market value. Both of these changes could result in large changes in its measured capital structure Give the correct response to the following