Which of the following best describes the 'trade-off' theory?
A) Maintaining the cost of borrowing at the same level as the cost of equity.
B) Balancing the WACC and the cost of borrowings.
C) Balancing the benefits received from interest being a taxable expense with the cost of possibly going bankrupt.
D) None of the above is a good description.
Correct Answer:
Verified
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