Determining optimal capital structure

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Reference no: EM1336794

Answer the questions below: please provide thorough, qualitative answers including some examples.

1. In practice, how can a firm determine whether it is operating at (or near) its optimal capital structure?

2. Under what circumstances should a firm use:

a) more debt in its capital structure than is used by the "average" firm in the industry?

b) when should it use less debt than the "average" firm?

Reference no: EM1336794

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