Question: 2. The optimal capital structure has been achieved when the: A. debt-equity ratio is equal to 1. B. debt-equity ratio results in the lowest possible

2. The optimal capital structure has been achieved when the:

A. debt-equity ratio is equal to 1.

B. debt-equity ratio results in the lowest possible weighted average cost of capital.

C. weight of equity is equal to the weight of debt.

D. cost of equity is maximized given a pre-tax cost of debt.

E. debt-equity ratio is such that the cost of debt exceeds the cost of equity.

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