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Maximise the use of debt to maximise return

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In a world of tax, if a firm went from a very low debt level to successively a higher levels of debt, what would happen to share price? Explain your answer.

As the cost of debt, Kd is always less than the cost of equity,Ke companies should maximise the use of debt to maximise return. Comment on this statement.

Reference no: EM133076182

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