Applying results to both unlevered and levered firms

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When calculating WACC and applying the results to both unlevered (no debt) and levered (debt) firms, the levered firm is shown to be more valuable. Two identical firms and the firm with debt is more highly valued. Does this make sense? Why or Why not? Why not use 100 percent debt financing if debt increases value?

Reference no: EM13847481

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