In each of the theories of capital structure, the cost of equity rises as the amount of debt increases.
So why don't ﬁnancial managers use as little debt as possible to keep the cost of equity down?
After all, isn't the goal of the ﬁrm to maximize share value (and minimize shareholder costs)?

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The Answer of In each of the theories of capital structure, the cost of equity rises as the amount of debt increases.
So why don't ﬁnancial managers use as little debt as possible to keep the cost of equity down?
After all, isn't the goal of the ﬁrm to maximize share value (and minimize shareholder costs)?

In Each of the Theories of Capital Structure, the Cost