The moderate view of capital structure theory allows for the tax-deductibility of interest expense.

Question

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The moderate view of capital structure theory recognizes that interest expenses are tax-deductible, which means that debt financing can result in lower overall taxes for a company. However, this view also acknowledges that there are limits to how much debt a company can take on before it becomes too risky and potentially harmful to its operations.

The Moderate View of Capital Structure Theory Allows for the Tax-Deductibility