The CFO of the Bend Co., a manufacturing company of consumer products, is talking to his friend
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Question:
The CFO of the Bend Co., a manufacturing company of consumer products, is talking to his friend who manages a real estate development business. They are comparing the leverage of the manufacturing industry, which is low on average, to the real estate development business, which is very high on average as projects are usually financed with more than 75% of debt. Using the trade-off theory of capital structure, explain why that is the case (you must be specific at justifying your argument to get credit; no calculations necessary).
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