Given a corporate income tax, financial distress costs, and agency costs, an optimal capital structure consisting of
Question:
Given a corporate income tax, financial distress costs, and agency costs, an optimal capital structure consisting of both debt and equity is shown to exist. Determination of the optimal capital structure involves balancing the present value of the tax shield accruing from debt financing against the present value of the expected financial distress costs and the agency costs associated with debt financing. L0358
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Question Posted: