Possible and as high a coupon rate as possible

Reference no: EM133432306

Question: Considering you are the CFO of Canadian Tire, according to the capital structure theories we examined, a firm benefits by having debt since the Interest expense is deductible for tax purposes. creating an Interest tax shield. The interest tax shield, on the other hand, Increases In value the higher the coupon rate on the debt and the higher the tax rate. Ignoring ?nancial distress costsJr shouldn't you on behalf of the Canadian Tire firm then choose to borrow as much as possible and as high a coupon rate as possible?

Reference no: EM133432306

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