Utilize the interest tax shield

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Reference no: EM132053024

While debt can be beneficial for firms that can utilize the interest tax shield, it can also come at a cost. Explain what risk-shifting is and give an example. How does it differ from debt overhang? Why and how might these problems be costly for investors of the firm? What kinds of companies are more likely to be prone to these problems? Be as specific as you can when describing those companies. Suggest ways to alleviate these problems.

Reference no: EM132053024

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