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lii lii
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3 years ago
When agency and bankruptcy costs are considered, the optimal capital structure has a debt level where

▸ bankruptcy costs are maximized.

▸ the debt/equity ratio is 2:1.

▸ the cost of equity equals zero.

▸ the cost of debt equals the cost of equity.

▸ the sum of agency and bankruptcy costs equal the benefits of using debt.
Textbook 
Corporate Finance Online

Corporate Finance Online


Edition: 2nd
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cesadycesady
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3 years ago
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