Business, 16.10.2021 15:30, shelbyhood8329

The MM theory with taxes implies that firms should issue maximum debt. In practice, this does not occur because: U. S. regulations require the debt-equity ratio of publicly-traded firms to be in the range of .3 to .7. debt is more risky than equity. bankruptcy is a disadvantage to debt. the weighted average cost of capital is directly related to the debt-equity ratio. the weighted average cost of capital is inversely related to the debt-equity ratio.

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