Question: Financing capital projects by issuing debt is substantially less expensive to a firm than issuing equity (common shares). From the investor's perspective the acceptable return

 Financing capital projects by issuing debt is substantially less expensive to

Financing capital projects by issuing debt is substantially less expensive to a firm than issuing equity (common shares). From the investor's perspective the acceptable return on debt is lower than the anticipated return on equity and the cost of debt servicing can be written off thereby reducing the firm's taxes. Despite this, explain why a treasurer would not be advised to fund the entire cost of capital projects from debt

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