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Hi Sir ,
I find your video lessons so useful and you are an interesting lecturer too.By the way, In the example question regarding ,
M&M 1963 theory of capital structure with tax assumption, Kaplan states that financial distress does not carry any costs , which according to them is the answer.
But I recall that you mentioned the answer is “company is liable to tax ,but not its shareholders.
I’m guessing this is the correct answer since Kaplan carry mistakes here and there. But I do want to clarify this please?
Thank You
Hi,
I’ve not got the question you are referring to available to me to answer it. What is the question?
Thanks
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 shareholdersThe 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.
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