Connect with knowledgeable individuals and get your questions answered on IDNLearn.com. Ask your questions and receive detailed and reliable answers from our experienced and knowledgeable community members.
Sagot :
A beneficial rule to follow is to set the firm's capital structure so that the firm's value is minimized.
Firm's Optimal capital structure
- In corporate finance, capital structure refers to the combination of several external funding sources, also known as capital, utilized to finance a company. It is listed on the balance sheet of the company and comprises equity owned by shareholders, debt, and preferred shares.
- The best combination of debt and equity financing for a company's capital structure optimizes market value while lowering the cost of capital. Theoretically, because debt financing is tax deductible, it has the lowest cost of capital.
- The best combination of debt and equity financing that increases market value while lowering a company's cost of capital is known as an optimal capital structure.
- One strategy to optimize for the lowest cost mix of financing is to reduce the average cost of capital.
To learn more about the Firm's Optimal capital structure refer to:
https://brainly.com/question/15041466
#SPJ4
Thank you for joining our conversation. Don't hesitate to return anytime to find answers to your questions. Let's continue sharing knowledge and experiences! Trust IDNLearn.com for all your queries. We appreciate your visit and hope to assist you again soon.
