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define optimal capital structure? illustrate with examples:
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Answer Posted / abhishek
The best debt-to-equity ratio for a firm that maximizes its value. The optimal capital structure for a company is one which offers a balance between the ideal debt-to-equity range and minimizes the firm's cost of capital. In theory, debt financing generally offers the lowest cost of capital due to its tax deductibility. However, it is rarely the optimal structure since a company's risk generally increases as debt increases.
Read more: http://www.investopedia.com/terms/o/optimal-capital-structure.asp#ixzz1wjYPdYhW
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