Explain reasoning for the capital structure

Reference no: EM132077924

Question: Some say debt is expensive is equity is free. Some say equity is expensive and debt is lower cost that equity. Which statement do you agree with and why.

What according to you should be ideal capital structure (ie ideal mix of equity & debt) of

(1) startup business,

(2) running business in growth scale up mode, and

(3) stable business where sales growth is not that high.

Please explain your reasoning for your capital structure.

Justify your answers with appropriate reasoning, cite references.

Reference no: EM132077924

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