In addition to the tax shield offered by governments around the world, debt has a lower required rate of return than equity - explain why this is so? 2) Given the inherent tax shield advantages why might we still come across 100% Equity financed firms? 3) Why is it not common to see firms with extremely large debt components in their capital structure? 4) Is there an optimal ratio of debt to equity and if so what factors determine it? 5) Why is it not appropriate to evaluate all potential projects based on a firms WACC?