NBN Ltd has decided to invest in a project, which will increase total asset value by $1 million. The company has decided to borrow a new debt so that its D/E ratio is maintain around 50%. Which of the following capital structure theories can best justify the decision of NBN?

Select one:

a. Pecking order theory

b. MM theory (no tax)

c. MM theory (with tax)

d. Trade-off theory

e. Signalling theory

Answer rating: 100% (QA)

The tradeoff theory of capital structure is the id... View the full answer