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The diagram below illustrates the trade-off theory of capital structure. The lines C and D are: Vahe on (0) c. B level of debt The
The diagram below illustrates the trade-off theory of capital structure. The lines C and D are: Vahe on (0) c. B level of debt The expected return on levered equity, and the debt tax shield respectively The agency costs of debt and the debt tax shield, respectively The debt tax shield and the agency cost of equity, respectively
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