When firm is operating with the optimal capital structure

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Reference no: EM131838554

1. In a world with taxes and financial distress, when a firm is operating with the optimal capital structure the:

A. firm will be all-equity financed.

B. weighted average cost of capital will be maximized.

C. required return on assets will be at its maximum point.

D. increased benefit from additional debt is equal to the increased bankruptcy costs of that debt.

E. debt-equity ratio will be less than optimal.

2. Cash flows by year for an indivdidual investors account.

2012= +3000

2013= +450

2014=+1100

2015= +2000

2016= -7550

a. Provide name of correct Rate of Return to use:

b. Average annual rate of return in percent 2012-2016.

Reference no: EM131838554

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