You have seen that the cost of equity increases as the amount of debt increases.So why shouldn't financial managers of tax-paying firms use as little debt as possible to keep the cost of equity down? After all,the goal of financial management is to maximize the value of the firm to its shareholders.

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The Answer of You have seen that the cost of equity increases as the amount of debt increases.So why shouldn't financial managers of tax-paying firms use as little debt as possible to keep the cost of equity down? After all,the goal of financial management is to maximize the value of the firm to its shareholders.

You Have Seen That the Cost of Equity Increases as the Amount