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What is Corporate Borrowing Strategies Explained about?
This chapter discusses how much a corporation should borrow. It provides examples of calculations of the present value of tax shields from borrowing and the relative advantage of debt versus equity given different tax rates. It also discusses the costs of financial distress and how borrowing levels may differ for more versus less profitable firms. Maximizing firm value involves balancing the tax benefits of borrowing with the costs of financial distress.
- Author
- priyanka Gayathri
- Language
- EN