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M AND M THEORY OF CAPITAL STRUCTURE

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › M AND M THEORY OF CAPITAL STRUCTURE

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.
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  • November 9, 2014 at 4:31 pm #208640
    syed ali
    Member
    • Topics: 92
    • Replies: 54
    • ☆☆

    This theory without tax has more cost then with tax (as with tax the interest is tax deductible) why is more without tax please help me

    November 9, 2014 at 5:42 pm #208656
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54751
    • ☆☆☆☆☆

    You have answered it yourself!!!

    With tax, the company gets tax relief on the interest that they pay, and so the net cost to the company is reduced.

    Have you watched the lectures on this?
    (I have asked before if you have watched the lectures, but you have not answered! If you watch the lectures then all these points are explained.)

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