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The factor affecting choice of Capital Structure is:

(A) Tax Rate

(B) Control

(C) Capital Structure of other Companies

(D) Operating Efficiency

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 2

Factors affecting capital structure include tax rate (higher tax makes debt cheaper), control considerations (equity dilutes control), and capital structure of other companies in the industry, which serves as a benchmark. Operating efficiency is not listed as a determinant of capital structure. Hence (A), (B) and (C) only.

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