Description
Discuss three practical considerations that would guide you through selecting an optimal capital structure for your firm. Rank these considerations from the most important to the least
Explanation & Answer
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Running head: SELECTING AN OPTIMAL CAPITAL STRUCTURE
Selecting an Optimal Capital Structure
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SELECTING AN OPTIMAL CAPITAL STRUCTURE
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Selecting an Optimal Capital Structure
Managers must identify an optimal capital structure for startups by evaluating the amount
of money obtained from loans to avoid endangering their organizations. Michalak (2013) defines
an organization’s capital structure as the relation of equity and foreign capital. Optimal capital
structure (OCS) entails the financial measurements used by managers to determine the ideal
equity and debt to obtain highest company value (Michalak, 2013). Companies must decide
whether to increase equity or debt to obtain an OCS. The OCS assists firms in reducing capital
costs, which allows them to support ...