[romeshjadrian]

Appreciate your reply !!!!

[romeshjadrian]

Thanks a lot..

[romeshjadrian]

Hello Sir,

M&M 1963 theory of capital structure assumes that :

1/ The Cost of equity remains constant regardless of the gearing level
2/ Financial distress does not carry any cost
3/ Companies can borrow at Zero Cost
4/A Company is liable to tax but not its shareholders

The above is the question , However in the Kaplan they mention the answer as Answer “2”,

whereas I recall in the video as answer “4” . I just need to Clarify , which is the correct one?

Thank you for your concern.

[Author]

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