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The pecking order view of capital structure suggests that for financing new projects, firms prefer Borrowing (debt) over issuing more equity. Internally generated funds over

  1. The pecking order view of capital structure suggests that for financing new projects, firms prefer
    1. Borrowing (debt) over issuing more equity.
    2. Internally generated funds over borrowing.
    3. Equity over debt.
    4. Paying out all of the firm's earnings as dividends to existing shareholders to maximize shareholders' wealth.
    5. Both a & b.

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