When agency and bankruptcy costs are considered, the optimal capital structure has a debt level where
A) bankruptcy costs are maximized.
B) the debt/equity ratio is 2:1.
C) the cost of equity equals zero.
D) the cost of debt equals the cost of equity.
E) the sum of agency and bankruptcy costs equal the benefits of using debt.
E
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Which of the following describes the condition in which courts impose liability based on negligent design?
A) when the materials used by the manufacturer satisfy most of the standards acceptable in the trade B) when the risk of harm outweighs the utility of the product C) when the manufacturer fails to include a warning about obvious dangers D) when the manufacturer warns only the original purchaser and not the user
The noncomparability of performance data across countries ________
A) reduces employee empowerment B) hinders the evaluation process C) lowers production D) enhances the overall organizational efficiency