How managers choose to finance the business does not affect the rate of return to shareholders because the rate of return is based on how the company uses the assets it has,not whether or not they paid for the assets with debt or equity.

Question

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How a business is financed can affect the rate of return to shareholders since the cost of debt or equity financing can impact the profitability of a company's projects and ultimately impact the return to shareholders. For example, if a company chooses to finance through high-interest debt, it may have higher financial obligations and less cash available for shareholders. However, if a company uses equity financing, it may dilute the ownership stake of existing shareholders.

How Managers Choose to Finance the Business Does Not Affect