Question: The optimal capital structure has been achieved when the: Debt-equity ratio is equal to 1. Weight of equity is equal to the weight of debt.

The optimal capital structure has been achieved when the:

Debt-equity ratio is equal to 1.

Weight of equity is equal to the weight of debt.

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

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

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

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