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In each of the theories of capital structure, the cost of equity increases as the amount of debt increases. So why don't financial managers use
In each of the theories of capital structure, the cost of equity increases as the amount of debt increases. So why don't financial managers use as little debt as possible to keep the cost of equity down? After all, aren't financial managers supposed to maximize the value of a firm? (Consider the difference between cost of equity and the weighted average cost of capital)
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