15. Agency costs (S17-2) The Salad Oil Storage (SOS) Company has financed a large part of its...

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15. Agency costs (S17-2) The Salad Oil Storage (SOS) Company has financed a large part of its facilities with long-term debt. There is a significant risk of default, but the company is not on the ropes yet. Explain:

a. Why SOS stockholders could lose by investing in a positive-NPV project financed by an equity issue.

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Principles Of Corporate Finance

ISBN: 9781264080946

14th Edition

Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans

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