The difference between the M&M theory Case I (no taxes no bankruptcy costs) and M&M Case II
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- The difference between the M&M theory Case I (no taxes no bankruptcy costs) and M&M Case II (taxes no bankruptcy costs):
- Questions:
- 1) The relationship between cost of equity and leverage linear in Case I and non-linear in Case II?
- 2) Debt is more important according to Case I?
- 3) Case I does not consider the advantages of debt but Case II only considers the advantages of debt ?
- 4) Case I has an optimal capital structure while Case II does not?
- 5) Cost of equity increases with cost of equity in Case I only?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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