Use appropriate theories of capital structure to offer reasoned explanations of why the following phenomenon are...

80.2K

Verified Solution

Question

Finance

Use appropriate theories of capital structure to offer reasonedexplanations of why the following phenomenon are observed inreality: i. Utility and airline companies are likely to have highlevels of debt; ii. High-technology companies are likely to rely onequity financing; iii. The most profitable companies, such asGoogle, Microsoft, have little debt.

Answer & Explanation Solved by verified expert

3.6 Ratings (592 Votes)

the four approaches to capital structure theory are net income approach states that debt financing decreases overall cost of capital and increases the value of firm net operating income approach states that WACC is constant when there are no taxes traditional approach states that there is one optimal capital structure which minimizes capital cost modigliani millier approach it See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member