The cost of ________ is highest for firms that are likely to have profitable future growth opportunities requiring large investments.

Name: The cost of ________ is highest for firms that are likely to have profitable future growth opportunities requiring large investments.
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Question

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Debt overhang is costly for firms with profitable future growth opportunities because it discourages new investment, as the benefits of new projects may primarily go to existing debt holders rather than equity holders.

The Cost of ________ Is Highest for Firms That Are