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Business, 23.12.2020 17:00 DepressionCentral

"You are considering the capital structure for a firm under three different cases: Case I. no taxes, no bankruptcy costs; Case II. with taxes but no bankruptcy costs; Case III. with taxes and with bankruptcy costs. 1) There is a (positive or negative) relation between firm value and WACC. 2) In which case (I, II or III), capital structure is irrelevant? why? 3) Given case II and leverage decreases, what happens to firm value? what happens to cost of equity?"

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