A firm's optimal capital structure is the combination of debt financing and equity financing that ______.
A. maximizes its expected earnings per share (EPS).
B. simultaneously maximizes its EPS and minimizes its weighted average cost of capital (WACC).
C. minimizes its cost of equity, which is a necessary condition for maximizing the firm's stock price.
D. simultaneously minimizes its cost of debt, its cost of equity, and its WACC.
E. maximizes its stock price.
Answer: E
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