The WACC formula assumes that debt is rebalanced to maintain a constant debt ratio D V Rebalancing ties the level of future interest tax shields to the future value of the company This makes the tax shields risky Does that mean that fixed debt levels (no rebalancing) are better for stockholders ...

Fixed debt levels without rebalancing are not necessarily better for stockholders Note th ...

The WACC formula assumes that debt is rebalanced to maintain a constant debt ratio D/V. Rebalancing ties

Question:

The WACC formula assumes that debt is rebalanced to maintain a constant debt ratio D/V. Rebalancing ties the level of future interest tax shields to the of the company. This makes the tax shields risky. Does that mean that fixed debt levels (no rebalancing) are better for stockholders?

Future Value
Future value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The future value (FV) is important to investors and financial planners as they use it to estimate how much an investment made today will be worth...