The optimal capital structure

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1. The optimal capital structure:

A. places more emphasis on the operations of a firm rather than the financing of a firm.

B. is unaffected by changes in the financial markets.

C. of a firm will vary over time as taxes and market conditions change.

D. will be the same for all firms in the same industry.

E. will remain constant over time unless the firm makes an acquisition.

2. A firm has a market value equal to its book value. Currently, the firm has excess cash of $600 and other assets of $5,400. Equity is worth $6,000. The firm has 300 shares of stock outstanding and net income of $783. What will the new earnings per share be if the firm uses 25 percent of its excess cash to complete a stock repurchase?

2.41

2.01

1.61

3.21

2.68

Reference no: EM131818309

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