Traditional Approach The RELEVANCE ARGUMENT capital structure is relevant to the market value of the firm and the firm's cost of capital a There is an optimal debt-to-equity mix that minimises wacc and maximises the market value of the firm to its shareholdersTraditional Approach ◼ The RELEVANCE ARGUMENT - capital structure is relevant to the market value of the firm and the firm’s cost of capital. ◼ There is an optimal debt-to-equity mix that minimises WACC and maximises the market value of the firm to its shareholders