Busıness Fınance Iı Deneme Sınavı Sorusu #974592

Which capital structure theory advocates that a firm can boost its value by lowering its WACC, which is possible by increasing financial leverage in its capital structure?


Traditional approach

Trade-off theory

Net income approach

Net Operating Income Approach

Modigliani and Miller Capital Structure Theory


Yanıt Açıklaması:

The net income approach advocates that a firm can boost its value by lowering its WACC, which is possible by increasing financial leverage in its capital structure. In this approach, it is assumed that the cost of debt is always less than the cost of equity and that the increase in the debt ratio does not lead to a change in the risk perception of the investors. The correct answer is C.

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