In order to design an optimal capital structure, a company should strive
A. Maximum Debt
B. Minimum Debt
C. Minimum WACC
D. Minimum cost of Equity
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a maximum debt is my guessing
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In order to design an optimal capital structure, a company should strive C. Minimum WACC
An optimal capital structure is the best mix of debt and equity financing that maximizes the companies market value along with minimizing its cost of capital.
WACC stands for Weighted average cost of capital and minimizing WACC is one of the ways of achieving optimal capital structure.
WACC can be minimized by the mix of both debt and equity.
Therefore to achieve optimal capital structure a company should strive for minimum WACC which can be achieved by a mix of debt and equity.
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