What is the opportunity cost of (a) Borrowed funds (b) Equity capital? Under current tax law, firms
Question:
What is the opportunity cost of
(a) Borrowed funds
(b) Equity capital?
Under current tax law, firms can record as an expense the opportunity cost of borrowed funds, but not equity capital. How does this tax law affect the amount of debt the firm wants to incur, compared with the amount of money it raises by selling equity?
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a Opportunity Cost of Borrowed Funds When a firm borrows funds it incurs interest expenses The opportunity cost of using borrowed funds is the return ...View the full answer
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Related Book For 
Economics Private And Public Choice
ISBN: 9780357133996
17th Edition
Authors: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
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