Answered step by step
Verified Expert Solution
Question
1 Approved Answer
True or false, explain 1. The cost of equity is generally much higher than the after-tax cost of debt. Therefore, increasing the debt ratio will
True or false, explain
1. The cost of equity is generally much higher than the after-tax cost of debt. Therefore, increasing the debt ratio will always lower the cost of capital
2. If dividend payments to stockholders are tax deductible to corporations, the optimal debt ratios of these firms will decrease.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started