Question

The manager of a firm should change the capital structure if and only if Blank______.

Multiple choice question.

it increases the value of the firm


the value of the debt exceeds the value of the equity


it benefits management


it decreases the value of the firm

Answer 1

The correct answer is:

**it increases the value of the firm**.

A manager should consider changing the capital structure only if it leads to an increase in the overall value of the firm.