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John Moffat says
February 22, 2019 at 2:41 pm
Pecking order theory is concerned with the raising of long-term capital (not short-term finance, which is what delaying payments is).
July 29, 2019 at 5:26 pm
Hello sir. Please can tax benefits be applied to preference shares?
February 19, 2020 at 1:57 pm
No. Because preference share holders get dividend and dividends are not tax allowable.
February 22, 2019 at 7:55 am
Hi John, In terms of financing working capital , within the pecking order theory where would you place withholding supplier payments?
December 19, 2018 at 11:33 am
Hello sir, How can there be a cost of debt 10% in the example 1 when there is no debt at all. 0 % share of debt is given in scenario 1 of example 1?
December 19, 2018 at 2:27 pm
Why not? Maybe you could borrow money from the bank at a cost of 10% – it doesn’t mean you will necessarily be borrowing it 🙂
Anyway, the graph is only of relevance in explaining what happens to the WACC and since they are not borrowing debt at 0% gearing, it is not included in the calculation of the WACC!!
December 20, 2018 at 7:26 am
That expalains it. Thank you 🙂
December 20, 2018 at 7:35 am
You are welcome 🙂
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