CIMA F3 Capital structure (theories)

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1. mohammedhayad says

   August 18, 2018 at 6:12 am

   During the explanation of M&M proposition with taxes (1963) you stated that, the cost of bankruptcy has been completely ignored and therefore with the inclusion of bankruptcy cost WACC would increase, which is similar to the traditional theory. If it so, then isn’t it an assumption that Financial distress does not carry any cost, is correct in the Example of M&M assumptions. Please clarify.

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2. gavinmo says

   June 6, 2018 at 12:15 pm

   Well presented, I now understand it much better after watching the lecture video

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