The following factors are considered while deciding the capital structure of the firm:

• Desired Level of Leverage: Financially, leverage refers to furnish the ability to use assets or funds with a fixed cost to increase the return to its shareholders. It is the basic and important factor, which affects the capital structure. It uses fixed-cost financing such as debt, equity and preference share capital and closely related to the overall cost of capital.
• Cost of Capital: Cost of capital is the main determining factor of the capital structure of a firm. Normally long-term finance such as equity and debt consist of fixed cost security issuance. When the cost of capital increases, the value of the firm will also decrease.

The following factors affect the cost of capital of a company:

• Nature of the business: Use of fixed interest/dividend bearing finance depends upon the nature of the business. If the business consists of a long period of operation, it will apply for equity than debt, and it will reduce the cost of capital.
• Size of the company: It also affects the capital structure of a firm. If the firm belongs to a large scale, it can manage the financial requirements with the help of internal sources. Wheraes, if it is small size, they will go for external finance. It consists of a high cost of capital.
• Legal requirements: Some companies, such as banks are legally restricted to raise funds from some sources.
• Requirement of investors: In order to collect funds from a different type of investors, it will be appropriate for companies to issue different sources of securities.

As can also be understood from the information given, “Nature of the business”, “Size of the company”, ”Legal requirements” and “Requirement of investors” are the factors affect the cost of capital of a company, so the correct answer is E. “Desired Level of Leverage” is considered together with the cost of capital  while deciding the capital structure of the firm.