Recently, debt has been cheap and easy to get, and it also has certain tax advantages. Debt can also magnify the return on providers of equity through financial leverage. But leverage can work both for a company and against it. So, financial managers must choose the amount of debt a firm holds carefully. Explain why, in a world with business taxes and the chance of bankruptcy, would a small firm with volatile earnings be unlikely to have a large amount of debt? Support your response with an example.