The firm capital structure has no impact on firm value

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Reference no: EM131608625

In a standard M&M environment (perfectly efficient capital markets, etc...), the firm’s capital structure has no impact on firm value. List each of these factors and describe how they affect the optimal borrowing level.

1. Why is this?

2. Describe the various factors that affect the optimal capital structure of the firm in a more realistic environment.

3. List each of these factors and describe how they affect the optimal borrowing level.

Reference no: EM131608625

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