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Explain Why the curves in the graph are shaped as they are Why does a firm not use all debt financing since it is cheaper

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Explain

Why the curves in the graph are shaped as they are

Why does a firm not use all debt financing since it is cheaper

Why a graph of the value of the firm might be inverted U-shaped (hump-shaped)

The possible reasons for financial hierarchy (pecking order) theory.

rE rises with leverage. For the moment we can At D/E near consider rD to be fixed - banks will lend any zero the

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