Business, 11.02.2020 00:28 kkruvc

The MM theory with taxes implies that firms should issue maximum debt. In practice, this does not occur because:

the weighted average cost of capital is inversely related to the debt-equity ratio.

the weighted average cost of capital is directly related to the debt-equity ratio.

U. S. regulations require the debt-equity ratio of publicly-traded firms to be in the range of .3 to .7.

bankruptcy is a disadvantage to debt.

debt is more risky than equity.

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The MM theory with taxes implies that firms should issue maximum debt. In practice, this does not oc...

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