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Title: The Tradeoff Theory suggests: Post by: suiren on Jul 7, 2019 The Tradeoff Theory suggests:
▸ there is no rational explanation for why firms choose debt levels that are too low to fully exploit the debt tax shield. ▸ differences in the magnitude of financial distress costs and the volatility of cash flows cannot explain the differences in the use of leverage across industries. ▸ with higher costs of financial distress, it is optimal for the firm to choose higher leverage. ▸ the firm should choose a debt level where the tax savings from increasing leverage are just offset by the increased probability of incurring the costs of financial distress. Title: The Tradeoff Theory suggests: Post by: crdsa on Jul 7, 2019 Content hidden
Title: The Tradeoff Theory suggests: Post by: suiren on Jul 7, 2019 Thanks
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