Continued... OCapital Structure Terminology Optimal capital structure o Minimizes a firm's weighted cost of capital o Maximizes the value of the firm Target capital structure o Capital structure at which the firm plans to operate Debt capacity o Amount of debt in the firm's optimal capital structure 渊补楂价贸多方号 YO年N0事0E000Continued… zCapital Structure Terminology – Optimal capital structure o Minimizes a firm’s weighted cost of capital o Maximizes the value of the firm – Target capital structure o Capital structure at which the firm plans to operate – Debt capacity o Amount of debt in the firm’s optimal capital structure