Question

How do you think that cost of capital and capital structure are interrelated?

Answer 1

Answer:

cost of capial and capital structure direcly related to each other

Explanation:

As Cost of capital is an important factor in determining the company’s capital structure. Companies are usually looking for the optimal combination of debt and equity to minimize the cost of capital.

Determining a company’s optimal capital structure can be a tricky endeavour because both debt financing and equity financing carry respective advantages and disadvantages

And Capital Structure refers to the amount of debt and/or equity employed by a firm to fund its operations and finance its assets.  The structure is typically expressed as a debt-to-equity or debt-to-capital ratio.