More debt in the capital structure provides managers with an incentive to maximize cash flows, but also makes them want to take on negative NPV projects.
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Q2: M&M Proposition 1 assumes that the mix
Q6: The enterprise value of a firm is
Q8: Direct-bankruptcy costs are considered transactions costs and
Q10: Minimizing the cost of a firm's financing
Q11: A financial restructuring can change the value
Q12: When calculating free cash flow, it is
Q12: Issuing debt is less expensive than issuing
Q16: Indirect bankruptcy costs include changes in customer
Q17: M&M Proposition 2 states that the required
Q19: Direct bankruptcy costs are considered small when
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