Background Note | HBS Case Collection | February 1979

Note on the Theory of Optimal Capital Structure

by William E. Fruhan Jr.


Examines the interrelationship between the maximization of the share value of a firm's common stock and the minimization of the firm's weighted average cost of capital. Presents a revised version of a case by J.W. Mullins, Jr.

Keywords: Capital Structure; Cost of Capital; Stock Shares; Core Relationships; Value;


Fruhan, William E., Jr. "Note on the Theory of Optimal Capital Structure." Harvard Business School Background Note 279-069, February 1979.