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 change over time, these changes affect the risk and cost of each type of capital, and thus impact the firm's WACC. In addition, changes in a firm's WACC impact decisions and its stock price. Many factors influence capital structure decisions and determining the firm's optimal capital structure is not an exact science. In fo same industry often have dramatically different capital structures. investor-supplied funds-debt, preferred stock, common stock, and retained earnings. A firm's capital structure is the mix of debt. areferred stock, and common nance the firm's assets. Capital structure theory suggests that some optimal capital structure exists that simultaneousi firm's stock price and cost of capital. The optimal capital structure strikes a balance between risk and return. A firm's target capital structure However, the target may change over time as conditions change, but at any given moment, a well-managed firm's mi ecisions are made so as to be consistent with this target capital structure: tructures also change over time for two different reasons: as a resuit of deliberate actions or as a resuit of market actions. First, if a firm is not currently at its targ tely raise funds in a manner that moves the actual capital structure toward its target. Second, the firm could incur high profits or losses that lead to significant k 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 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. te response to the following question. Dllowing is/are not investor-supplied fund(s)? Up to this point when we calculated a firm's weighted average cost of capital (WACC), we assumed that the firm had a spe structures often change over time, these changes affect the risk and cost of each type of capital, and thus impact the firm" capital budgeting decisions and its stock price. Many factors influence capital structure decisions and determining the firm's even firms in the same industry often have dramatically different capital structures. Capital refers to investor-supplied funds-debt, preferred stock, common stock, and retained earnings. A firm's capital stru equity used to finance the firm's assets. Capital structure theory suggests that some optimal capital structure exists that si its cost of capital. The optimal capital structure strikes a balance between risk and return. A firm's target capit capital structure. However, the target may change over time as conditions change, but at any given moment, a well-manag and financing decisions are made so as to be consistent with this target capital structure. Actual capital structures also change over time for two different reasons: as a result of deliberate actions or as a result of m it may deliberately raise funds in a manner that moves the actual capital structure toward its target. Second, the firm could changes in book value equity as shown on the balance sheet and to a decline in its stock price. Similarly interest rate chang changes in the firm's default risk could cause significant changes in its debt's market value. Both of these changes could res Give the correct response to the following question. Which of the following is/are not investor-supplied fund(s)? 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 change over time, these changes affect the risk and cost each type of captal, and thus impact the firm's WACC. In addition, changes in a firm's WACC impact its capital budgeting decisions and its stock price. Many factors influence capital structure decialons and determining the firm's cptimal capital structure is not an exact science. In fact, even firms in the same industry often have dramatically different capital structures. Capital refers to investor-suppled funds-debt, preferred stock, common stock, and retained earnings. A firm's capital structure is the mox of debt, preferred stock, and common equity used to finance the firm's assets. Copital structure theory sugsests that some optimal capitai structure exists that simultaneousiy a firm's stock price and its cost of capital. The optimal capital structure strkes a balance between risk and return. A firm's target capital structure is generally set equal to the estimated optima Capital structure. However, the target may change over time as conditions change, but at any given moment, a well-managed firm's management has a specific vtructure in mind: and financing declsions are made so as to be consistent with this target capital structire. Actual capital structures aiso change over bime for two different reasons: as a result of deliberate actions or as a result of market actions. First, if a firm is not currenty at its target, it may deliberately raise funds in a manner that moves the actual capital structure toward its target. Second, the firm covid incur high profits or lasses that lead to significant changes in book value equity as shown on the balance sheet and to a decline in its stock price. Similariy interest rate changes due to changes in the general level of rates and/ar changes in the firm's default nuk could cause significant changes in its debes market value. Both of trese changes could resuit in large changes in its measured capiai struchure. Give the correct response to the following question. Which of the following is/are cot investor-supplied fund(s)? 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 struct structures often change over time, these changes affect the risk and cost of each type of capital, and thus impact the firm's WACC. In addition, cha capital budgeting decisions and its stock price. Many factors influence capital structure decisions and determining the firm's optimal capital structu even firms in the same industry often have dramatically different capital structures. Capital refers to investor-supplied funds-debt, preferred stock, common stock, and retained earnings. A firm's capital structure is the mix of debt, equity used to finance the firm's assets. Capital structure theory suggests that some optimal capital structure exists that simultaneously s cost of capital. The optimal capital structure strikes a balance between risk and return. A firm's target capital structure is generally re. However, the target may change over time as conditions change, but at any given moment, a well-managed firm's management h decisions are made so as to be consistent with this target capital structure. Actual capital structures also change over time for two different reasons: as a result of deliberate actions or as a result of market actions. First, if a it may deliberately raise funds in a manner that moves the actual capital structure toward its target. Second, the firm could incur high profits or loss 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 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 it Give the correct response to the following question. Which of the following is/are not investor-supplied fund(s)