With perfect capital markets, a firm's value and cost of capital are independent of its choice of capital structure. However, when market imperfections arise, that affirmation does not hold. Therefore, answer the following questions (answers can be in Portuguese): a) If capital markets are not perfect, how the decisions about a firm's capital structure can impact its value and cost of capital? Cite the most relevant factors and briefly explain one of them. b) Why does firms' leverage level vary so much among industries? Give one example. c) Which are the main agency cost and benefits? (cite them and briefly explain 1 cost and 1 benefit)

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a If capital markets are not perfect decisions about a firms capital structure can impact its value and cost of capital in several ways Some of the mo... View the full answer